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•Compute the break-even sales (units) under the proposed program for the following year. units . Determine the amount of sales (units) that would be necessary under the proposed program to realize the $59,900,000 of perating income that was earned in the current year. units .Determine the maximum operating income possible with the expanded plant. . If the proposal is accepted and sales remain at the current level, what will the operating income or loss be for the following ear?

•Compute the break-even sales (units) under the proposed program for the following year. units . Determine the amount of sales (units) that would be necessary under the proposed program to realize the $59,900,000 of perating income that was earned in the current year. units .Determine the maximum operating income possible with the expanded plant. . If the proposal is accepted and sales remain at the current level, what will the operating income or loss be for the following ear?

FINANCIAL ACCOUNTING
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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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 $188,000,000 Cost of goods sold (101,000,000) Gross profit $87,000,000 Expenses: Selling expenses $15,000,000 Administrative expenses 12,100,000 Total expenses (27,100,000) Operating income $59,900,000 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 $13,160,000 in yearly sales. The expansion will increase fixed costs by $4,000,000 but will not affect the relationship between sales and variable costs.
Transcribed Image Text: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 $188,000,000 Cost of goods sold (101,000,000) Gross profit $87,000,000 Expenses: Selling expenses $15,000,000 Administrative expenses 12,100,000 Total expenses (27,100,000) Operating income $59,900,000 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 $13,160,000 in yearly sales. The expansion will increase fixed costs by $4,000,000 but will not affect the relationship between sales and variable costs.
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 $59,900,000 of operating income that was earned in the current year. units 6. Determine the maximum operating income possible with the expanded plant. $4 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?
Transcribed Image Text: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 $59,900,000 of operating income that was earned in the current year. units 6. Determine the maximum operating income possible with the expanded plant. $4 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?
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