rkeBookShow Me HowRequired:1. Determine the total variable costs and the total fixed costs for the current year.Total variable costsTotal fixed costs2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year.Unit variable costUnit contribution margin%243. Compute the break-even sales (units) for the current year.units4. Compute the break-even sales (units) under the proposed program for the following year.units5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $5,324,400 of income from operationsthat was earned in the current year.units6. Determine the maximum income from operations possible with the expanded plant.7. If the proposal is accepted and sales remain at the current level, what will the income or loss from operations be for the following year?8. Based on the data given, would you recommend accepting the proposal?PreviousCheck My Work 3 more Check My Work uses remaining. 2.cengagenow.com/im/lakeAbJIŲeBookShow Me HowBreak-Even Sales Under Present and Proposed ConditionsDarby Company, operating at full capacity, sold 169,200 units at a price of $87 per unit during the current year. Its income statement is as follows:Sales$14,720,400Cost of goods sold5,220,000Gross profit$9,500,400Expenses:Selling expenses$2,610,000Administrative expenses 1,566,000Total expenses4,176,000Income from operations$5,324,400The division of costs between variable and fixed is as follows:VariableFixedCost of goods sold60%40%Selling expenses50%50%Administrative30%70%expensesManagement is considering a plant expansion program for the following year that will permit an increase of $1,218,000 in yearly sales. The expansionwill increase fixed costs by $162,400, but will not affect the relationship between sales and variable costs.Required:temsCheck My Work 3 more Check My Work uses remaining.Previous

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Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 169,200 units at a price of $87 per unit during the current year. Its income statement is as follows: Sales $14,720,400 Cost of goods sold 5,220,000 Gross profit $9,500,400 Expenses: Selling expenses $2,610,000 Administrative expenses 1,566,000 Total expenses 4,176,000 Income from operations $5,324,400 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative 30% 70% expenses Management is considering a plant expansion program for the following year that will permit an increase of $1,218,000 in yearly sales. The expansion will increase fixed costs by $162,400, but will not affect the relationship between sales and variable costs. Required:

Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 169,200 units at a price of $87 per unit during the current year. Its income statement is as follows: Sales $14,720,400 Cost of goods sold 5,220,000 Gross profit $9,500,400 Expenses: Selling expenses $2,610,000 Administrative expenses 1,566,000 Total expenses 4,176,000 Income from operations $5,324,400 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative 30% 70% expenses Management is considering a plant expansion program for the following year that will permit an increase of $1,218,000 in yearly sales. The expansion will increase fixed costs by $162,400, but will not affect the relationship between sales and variable costs. Required:

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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Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 154,100 units at a price of $87 per unit during the current year. Its income statement is as follows: Sales $13,406,700 Cost of goods sold 4,756,000 Gross profit $8,650,700 Expenses: Selling expenses $2,378,000 Administrative expenses 1,421,000 Total expenses 3,799,000 Income from operations $4,851,700 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative expenses 30% 70% Management is considering a plant expansion program for the following year that will permit an increase of $1,044,000 in yearly sales. The expansion will increase fixed costs by $139,200, but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs for the current…
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