Break-even sales under present and proposed conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $188 per unit during the current year. Its income statement is as follows: Sales Cost of goods sold Gross profit Expenses: $16,000,000 Administrative expenses 12,000,000 Total expenses Selling expenses $188,000,000 (100,000,000) $88,000,000 Cost of goods sold Selling expenses Administrative expenses (28,000,000) $60,000,000 Operating income The division of costs between variable and fixed is as follows: Variable Fixed 70% 30% 75% 25% 50% 50% Management is considering a plant expansion program for the following year that will permit an increase of $11,280,000 in yearly sales. The expansion will increase fixed costs by $5,000,000 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 year. Total variable costs $ Total fixed costs $[ 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Unit variable cost $ Unit contribution margin 3. Compute the break-even sales (units) for the current year. units

Break-even sales under present and proposed conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $188 per unit during the current year. Its income statement is as follows: Sales Cost of goods sold Gross profit Expenses: $16,000,000 Administrative expenses 12,000,000 Total expenses Selling expenses $188,000,000 (100,000,000) $88,000,000 Cost of goods sold Selling expenses Administrative expenses (28,000,000) $60,000,000 Operating income The division of costs between variable and fixed is as follows: Variable Fixed 70% 30% 75% 25% 50% 50% Management is considering a plant expansion program for the following year that will permit an increase of $11,280,000 in yearly sales. The expansion will increase fixed costs by $5,000,000 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 year. Total variable costs $ Total fixed costs $[ 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Unit variable cost $ Unit contribution margin 3. Compute the break-even sales (units) for the current year. units

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: reak-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity,…

A: * As per Bartleby policy, in case multiple questions are asked then answer first three only.…

Q: Break-Even Sales Anheuser-Busch InBev SA/NV (BUD) reported the following operating information for a…

A: The question is based on the concept of Cost Accounting.

Q: Differential analysis for a discontinued product A condensed income statement by product line for…

A: Step 1Step 2Step 3 : Step 4

Q: Darby Company, operating at full capacity, sold 103,400 units at a price of $120 per unit during the…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: Darby Company, operating at full capacity, sold 76,950 units at a price of $48 per unit during the…

A: Compute the maximum income from operations possible with the expanded plant. No. of Sales (in…

Q: 1. Determine the total variable costs and the total fixed costs for the current year. Total…

A: Break-Even Sales (units) = Fixed Costs / Unit Contribution Margin Sales (units) = Fixed Costs +…

Q: Break-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity,…

A: “Since you have posted multiple questions, we will provide the solution only to the first question…

Q: pany, operating at full capacity, sold 1,000,000 units at a price of $189 per unit during the…

A: The contribution margin, or the difference between total sales revenue and total variable costs, is…

Q: Break-Even Sales Anheuser-Busch InBev SA/NV (BUD) reported the following operating information for…

A: Break even point means a point where firm is neither earning profit nor incurring any loss.…

Q: Break-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity,…

A: Total costs include both fixed, variable, and semi-variable costs. Fixed costs remain constant…

Q: YUX Corporation sells a single product for $40. Its management estimates the following revenues and…

A: The break-even sales are the sales where business earns no profit or loss during the period. The…

Q: Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity,…

A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…

Q: Break-Even Sales Anheuser-Busch InBev SA/NV (BUD) reported the following operating information for a…

A: First we will determine the current fixed cost Fixed cost component in Cost of goods sold is = 1 -…

Q: Break-Even Sales Anheuser-Busch InBev SA/NV (BUD) reported the following operating information for a…

A: The objective of this question is to calculate the break-even number of barrels for the current year…

Q: Break-Even Sales Cold One Brewing Company reported the following operating information for a recent…

A: Break-Even Point is the Point where the Contribution margin equals fixed costs or In Short a point…

Q: 3. Compute the break-even sales (units) for the current year. units 4. Compute the break-even sales…

A: Requirement 1Total variable costs$86,000,000Total fixed costs$39,000,000 Requirement 2Unit variable…

Q: None

A: Step 1: In the context of inventory, the inventory should be reported at the lower of its cost or…

Q: Break-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full…

A: "Since you have posted a question with multiple sub-parts, we will solve the subparts asked by you.…

Q: Break-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity,…

Q: Differential Analysis for a Discontinued Product A condensed income statement by product line for…

A: A) Continue Discontinue Differentiated effect on income Sales 390,000 0 (390,000)…

Q: Anheuser-Busch InBev SA/NV (BUD) reported the following operating information for a recent year:…

A: Formula: Contribution margin = Sales price - Variable cost

Q: Prepare a differential analysis dated January 21 to determine whether Star Cola should be continued…

A: Requirement a: Differential Analysis: Differential analysis refers to the analysis of differential…

Q: Break-even sales under present and proposed conditionsHoward Industries Inc., operating at full…

A: "Since you have asked a question with multiple sub-parts, we will solve first three sub-parts for…

Q: Break-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity,…

A: Hello, since the student has posted multiple requirements, we will answer the first three alone.

Q: Darby Company, operating at full capacity, sold 135,300 units at a price of $72 per unit during the…

A: Answer to the First part:- Total Variable Cost for the current year is as follows:- Particulars…

Q: Break-Even Sales Anheuser-Busch InBev Companies, Inc., reported the following operating information…

A: (a) Break-even sales (barrels) for the current year Selling price per barrel = $4,992,00052,000=$96…

Q: Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity,…

A: Cost-volume-profit (CVP) analysis, also known as break-even analysis, is a financial management tool…

Q: Last year, Hever Inc. had sales of $167,400, based on a unit selling price of $90. The variable cost…

A: Contribution Margin = Sales – Variable cost Contribution Margin Ratio = contribution/sales x 100…

Q: BeerBev, Inc., reported the following operating information for a recent year: Net sales $7,168,000…

A: Break even point is the level of sales at which the sales revenue generated by the company covers…

Q: Break-even sales under present and proposed conditions Howard Industries Inc., operating at full…

A: MARGINAL COSTING INCOME STATEMENTMarginal Costing Income Statement is one of the Important Cost…

Question

Break-even sales under present and proposed conditions
Portmann Company, operating at full capacity, sold 1,000,000 units at a price of
$188 per unit during the current year. Its income statement is as follows:
Sales
Cost of goods sold
Gross profit
Expenses:
$16,000,000
Administrative expenses 12,000,000
Total expenses
Selling expenses
Operating income
$188,000,000
(100,000,000)
$88,000,000
Cost of goods sold
Selling expenses
Administrative expenses
(28,000,000)
$60,000,000
The division of costs between variable and fixed is as follows:
Fixed
30%
25%
50%
Variable
70%
75%
50%
Management is considering a plant expansion program for the following year that
will permit an increase of $11,280,000 in yearly sales. The expansion will increase
fixed costs by $5,000,000 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 year.
Total variable costs $
Total fixed costs $
2. Determine (a) the unit variable cost and (b) the unit contribution margin for the
current year.
Unit variable cost $
Unit contribution margin $
3. Compute the break-even sales (units) for the current year.
units
4. Compute the break-even sales (units) under the proposed program for the
following year.
units
5. Determine the amount of sales (units) that would be necessary under the
proposed program to realize the $60,000,000 of operating income that was earned
in the current year.
units
6. Determine the maximum operating income possible with the expanded plant.
$
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?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Calculation of total variable and fixed costs:

VIEW

Step 3: Calculation of unit variable cost and unit contribution margin

VIEW

Step 4: Calculation of break-even point

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 5 steps with 4 images

SEE SOLUTION Check out a sample Q&A here

Follow-up Questions

Read through expert solutions to related follow-up questions below.

Follow-up Question

4. Compute the break-even sales (units) under the proposed program for the following year.

5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $60,000,000 of operating income that was earned in the current year.

6. Determine the maximum operating income possible with the expanded plant.

Solution

by Bartleby Expert

SEE SOLUTION

Similar questions

Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 161,800 units at a price of $132 per unit during the current year. Its income statement is as follows: Sales $21,357,600 Cost of goods sold 7,568,000 Gross profit $13,789,600 Expenses: Selling expenses $3,784,000 Administrative expenses 2,288,000 Total expenses 6,072,000 Income from operations $7,717,600 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 $1,980,000 in yearly sales. The expansion will increase fixed costs by $264,000, 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…
4-3 Break-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $189 per unit during the current year. Its income statement is as follows: Sales $189,000,000 Cost of goods sold (98,000,000) Gross profit $91,000,000 Expenses: Selling expenses $14,000,000 Administrative expenses 19,800,000 Total expenses (33,800,000) Operating income $57,200,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 25% Administrative expenses 50% 50% Management is considering a plant expansion program for the following year that will permit an increase of $11,340,000 in yearly sales. The expansion will increase fixed costs by $4,000,000 but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed…
Break-Even Sales BeerBev, Inc., reported the following operating information for a recent year: $4,224,000 $1,056,000 440,000 $1,496,000 $ 2,728,000* Net sales Cost of goods sold Selling, general, and administrative expenses Income from operations *Before special items In addition, assume that BeerBev sold 44,000 barrels of beer during the year. Assume that variable costs were 75% of the cost of goods sold and 50% of selling, general, and administration expenses. Assume that the remaining costs are fixed. For the following year, assume that BeerBev expects pricing, variable costs per barrel, and fixed costs to remain constant, except that new distribution and general office facilities are expected to increase fixed costs by $14,500. When computing the cost per unit amounts for the break-even formula, round to two decimal places. If required, round your final answer to one decimal place. a. Compute the break-even number of barrels for the current year. barrels b. Compute the anticipated…
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…
Break-Even Sales Under Present and Proposed Conditions 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 (102,000,000) Gross profit $88,000,000 Expenses: Selling expenses $15,000,000 Administrative expenses 14,700,000 Total expenses (29,700,000) Operating income $58,300,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 25% Administrative expenses 50% 50% Management is considering a plant expansion program for the following year that will permit an increase of $11,400,000 in yearly sales. The expansion will increase fixed costs by $5,000,000 but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs…
Break-Even Sales Under Present and Proposed Conditions 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 (98,000,000) Gross profit $89,000,000 Expenses: Selling expenses $15,000,000 Administrative expenses 14,300,000 Total expenses (29,300,000) Operating income $59,700,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 25% Administrative expenses 50% 50% Management is considering a plant expansion program for the following year that will permit an increase of $11,220,000 in yearly sales. The expansion will increase fixed costs by $3,000,000 but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs…
Break-Even Sales Under Present and Proposed Conditions 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 (98,000,000) Gross profit $89,000,000 Expenses: Selling expenses $14,000,000 Administrative expenses 15,800,000 Total expenses (29,800,000) Operating income $59,200,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 25% Administrative expenses 50% 50% Management is considering a plant expansion program for the following year that will permit an increase of $11,220,000 in yearly sales. The expansion will increase fixed costs by $3,000,000 but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs…
Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 114,800 units at a price of $108 per unit during the current year. Its income statement is as follows: Sales $12,398,400 Cost of goods sold 4,392,000 Gross profit $8,006,400 Expenses: Selling expenses $2,196,000 Administrative expenses 1,332,000 Total expenses 3,528,000 Income from operations $4,478,400 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative expenses 30% 70% Management is considering a plant expansion program for the following year that will permit an increase of $972,000 in yearly sales. The expansion will increase fixed costs by $129,600, but will not affect the relationship between sales and variable costs. 4. Compute the break-even sales (units) under the proposed program for the following…