Break-Even Sales Under Present and Proposed Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $190 per unit during the current year. Its income statement is as follows: Sales $190,000,000 Cost of goods sold (101,000,000) Gross profit $89,000,000 Expenses: Selling expenses $16,000,000 Administrative expenses 14,600,000 Total expenses (30,600,000) Operating income $58,400,000 The division of costs between vartable and fixed is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 29% Administrative 50% 50% expenses Management is considering a plant expansion program for the following year that will permit an increase of $13,300,000 in yearly sales. The expansion will increase fixed costs by $3,500,000 but will not affect the relationship between sales and variable costs.
Break-Even Sales Under Present and Proposed Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $190 per unit during the current year. Its income statement is as follows: Sales $190,000,000 Cost of goods sold (101,000,000) Gross profit $89,000,000 Expenses: Selling expenses $16,000,000 Administrative expenses 14,600,000 Total expenses (30,600,000) Operating income $58,400,000 The division of costs between vartable and fixed is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 29% Administrative 50% 50% expenses Management is considering a plant expansion program for the following year that will permit an increase of $13,300,000 in yearly sales. The expansion will increase fixed costs by $3,500,000 but will not affect the relationship between sales and variable costs.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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