Determine the amount of sales (units) that would be necessary under Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 93,150 units at a price of $63 per unit during the current year. Its income statement for the current year is as follows: Sales $5,868,450 Cost of goods sold 2,898,000 Gross profit $2,970,450 Expenses: Selling expenses $1,449,000 Administrative expenses 1,449,000 Total expenses 2,898,000 Income from operations $72,450 The division of costs between fixed and variable 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 that will permit an increase of $441,000 in yearly sales. The expansion will increase fixed costs by $44,100, 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. Enter the final answers rounded to the nearest dollar. Total variable costs $1 Total fixed costs $1

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Chapter1: Financial Statements And Business Decisions
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Determine the amount of sales (units) that would be necessary under
Break-Even Sales Under Present and Proposed Conditions
Darby Company, operating at full capacity, sold 93,150 units at a price of $63 per unit during the current year. Its income statement for the current year is as follows:
Sales
$5,868,450
Cost of goods sold
2,898,000
Gross profit
$2,970,450
Expenses:
Selling expenses
$1,449,000
Administrative expenses 1,449,000
Total expenses
2,898,000
Income from operations
$72,450
The division of costs between fixed and variable 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 that will permit an increase of $441,000 in yearly sales. The expansion will increase fixed costs by $44,100, 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. Enter the final answers rounded to the nearest dollar.
Total variable costs
Total fixed costs
%24
%24
Transcribed Image Text:Determine the amount of sales (units) that would be necessary under Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 93,150 units at a price of $63 per unit during the current year. Its income statement for the current year is as follows: Sales $5,868,450 Cost of goods sold 2,898,000 Gross profit $2,970,450 Expenses: Selling expenses $1,449,000 Administrative expenses 1,449,000 Total expenses 2,898,000 Income from operations $72,450 The division of costs between fixed and variable 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 that will permit an increase of $441,000 in yearly sales. The expansion will increase fixed costs by $44,100, 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. Enter the final answers rounded to the nearest dollar. Total variable costs Total fixed costs %24 %24
50%
50%
expenses
Management is considering a plant expansion program that will permit an increase of $441,000 in yearly sales. The expansion will increase fixed costs by $44,100, 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. Enter the final answers rounded to the nearest dollar.
Total variable costs
Total fixed costs
2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Enter the final answers rounded to two decimal places.
Unit variable cost
Unit contribution margin
3. Compute the break-even sales (units) for the current year. Enter the final answers rounded to the nearest whole number.
units
4. Compute the break-even sales (units) under the proposed program for the following year. Enter the final answers rounded to the nearest whole number.
units
5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $72,450 of income from operations that was earned in the
current year. Enter the final answers rounded to the nearest whole number.
units
6. Determine the maximum income from operations possible with the expanded plant. Enter the final answer rounded to the nearest dollar.
$
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? Enter the final answer rounded
to the nearest dollar.
Income
%24
%24
%24
%24
Transcribed Image Text:50% 50% expenses Management is considering a plant expansion program that will permit an increase of $441,000 in yearly sales. The expansion will increase fixed costs by $44,100, 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. Enter the final answers rounded to the nearest dollar. Total variable costs Total fixed costs 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Enter the final answers rounded to two decimal places. Unit variable cost Unit contribution margin 3. Compute the break-even sales (units) for the current year. Enter the final answers rounded to the nearest whole number. units 4. Compute the break-even sales (units) under the proposed program for the following year. Enter the final answers rounded to the nearest whole number. units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $72,450 of income from operations that was earned in the current year. Enter the final answers rounded to the nearest whole number. units 6. Determine the maximum income from operations possible with the expanded plant. Enter the final answer rounded to the nearest dollar. $ 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? Enter the final answer rounded to the nearest dollar. Income %24 %24 %24 %24
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