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Problem Set: Module 4 1. EX.06.01 2. PR.06.02A ALGO 3. BE 06.02. ALGO 4. BE.06.03 ALGO cengagenow.com ● Portmann Portmann Sales Cost of goods soid Gross profit Expenses Selling expenses 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: Administrative expenses Total expenses Cost of goods sold Selling expenses Administrative expenses $16,000,000 10,600,000 + Variable 70% 75% 50% units $188,000,000 (101,000,000) $87,000,000

Problem Set: Module 4 1. EX.06.01 2. PR.06.02A ALGO 3. BE 06.02. ALGO 4. BE.06.03 ALGO cengagenow.com ● Portmann Portmann Sales Cost of goods soid Gross profit Expenses Selling expenses 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: Administrative expenses Total expenses Cost of goods sold Selling expenses Administrative expenses $16,000,000 10,600,000 + Variable 70% 75% 50% units $188,000,000 (101,000,000) $87,000,000

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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o Problem Set: Module 4 1. EX.06.01 2. PR.06.02A.ALGO 3. BE.06.02.ALGO 4. BE.06.03.ALGO engagenow.com ● ● Sales Cost of goods sold Gross profit 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: Expenses: Selling expenses Administrative expenses. Total expenses Cost of goods sold Selling expenses $16,000,000 10,600,000 Administrative expenses + Variable Operating income The division of costs between variable and fixed is as follows: Fixed 70% 75% 50% $188,000,000 (101,000,000) $87,000,000 (26,600,000) $60,400,000 40 30% 25% 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: 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. 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? D Ⓡ
Transcribed Image Text:o Problem Set: Module 4 1. EX.06.01 2. PR.06.02A.ALGO 3. BE.06.02.ALGO 4. BE.06.03.ALGO engagenow.com ● ● Sales Cost of goods sold Gross profit 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: Expenses: Selling expenses Administrative expenses. Total expenses Cost of goods sold Selling expenses $16,000,000 10,600,000 Administrative expenses + Variable Operating income The division of costs between variable and fixed is as follows: Fixed 70% 75% 50% $188,000,000 (101,000,000) $87,000,000 (26,600,000) $60,400,000 40 30% 25% 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: 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. 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? D Ⓡ
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