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Please help me answer questions 4-6 on the attached problems.

Please help me answer questions 4-6 on the attached problems.

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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Please help me answer questions 4-6 on the attached problems.

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 (101,000,000) Gross profit $86,000,000 Expenses: Selling expenses $14,000,000 Administrative expenses 11,600,000 Total expenses (25,600,000) Operating income $60,400,000 | 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 $11,220,000 in yearly sales. The expansion will increase fixed costs by $4,500,000 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 $60,400,000 of operating income that was earned in the current year. units 6. Determine the maximum operating income possible with the expanded plant.
Transcribed Image Text: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 (101,000,000) Gross profit $86,000,000 Expenses: Selling expenses $14,000,000 Administrative expenses 11,600,000 Total expenses (25,600,000) Operating income $60,400,000 | 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 $11,220,000 in yearly sales. The expansion will increase fixed costs by $4,500,000 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 $60,400,000 of operating income that was earned in the current year. units 6. Determine the maximum operating income possible with the expanded plant.
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