6. Determine the maximum operating income possible with the expanded plant.4,350,000 x7. If the proposal is accepted and sales remain at the current level, what will the operating income or loss be for the following year?35,730,000 x Income Break-Even Sales Ud Show Me HowPortmann Company, operating at full capacity, sold 1,000,000 units at a price of $187 per unit during the current year. Its income statement is as follows:Sales$187,000,000Cost of goods sold(101,000,000)Gross profit$86,000,000Expenses:Selling expenses$14,000,000Administrative expenses 11,600,000Total expenses(25,600,000)Operating income$60,400,000The division of costs between variable and fixed is as follows:VariableFixedCost of goods sold70%30%Selling expenses75%25%Administrative50%50%expensesManagement is considering a plant expansion program for the following year that will permit an increase of $9,350,000 in yearly sales. The expansion will increase fixed costs by $3,500,000 but will not affectthe relationship between sales and variable costs.

Operating income is the amount that measures the amount of profit realized from business operations…

6. Determine the maximum operating income possible with the expanded plant. 4,350,000 x 7. If the proposal is accepted and sales remain at the current level, what will the operating income or loss be for the following year? 35,730,000 x Income

6. Determine the maximum operating income possible with the expanded plant. 4,350,000 x 7. If the proposal is accepted and sales remain at the current level, what will the operating income or loss be for the following year? 35,730,000 x Income

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

6. Determine the maximum operating income possible with the expanded plant.
4,350,000 x
7. If the proposal is accepted and sales remain at the current level, what will the operating income or loss be for the following year?
35,730,000 x Income

Break-Even Sales Ud Show Me How
Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $187 per unit during the current year. Its income statement is as follows:
Sales
$187,000,000
Cost of goods sold
(101,000,000)
Gross profit
$86,000,000
Expenses:
Selling expenses
$14,000,000
Administrative expenses 11,600,000
Total expenses
(25,600,000)
Operating income
$60,400,000
The division of costs between variable and fixed is as follows:
Variable
Fixed
Cost of goods sold
70%
30%
Selling expenses
75%
25%
Administrative
50%
50%
expenses
Management is considering a plant expansion program for the following year that will permit an increase of $9,350,000 in yearly sales. The expansion will increase fixed costs by $3,500,000 but will not affect
the relationship between sales and variable costs.

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