Required: 1. Determine the total variable costs and the total fixed costs for the current year. Total variable costs 4 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
Required: 1. Determine the total variable costs and the total fixed costs for the current year. Total variable costs 4 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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
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 financial performance details are as follows:
- **Sales**: $188,000,000
- **Cost of goods sold**: $100,000,000
- **Gross profit**: $88,000,000
**Expenses**:
- **Selling expenses**: $16,000,000
- **Administrative expenses**: $12,000,000
- **Total expenses**: $28,000,000
**Operating income**: $60,000,000
### Division of Costs Between Variable and Fixed
**The division of costs between variable and fixed is as follows**:
| Expense Type | 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 $11,280,000 in yearly fixed costs and $5,000,000 in variable costs. However, this change 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**: $____________
**Instructions**: After inputting the required values, click the "Check My Work" button to verify your answers.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd9c6fc3b-f1e5-4494-9d57-dc43d7a6af16%2F710be9fe-0f65-4efe-b3b5-43e9c04544ff%2Fnrniflp_processed.jpeg&w=3840&q=75)
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 $188 per unit during the current year. Its financial performance details are as follows:
- **Sales**: $188,000,000
- **Cost of goods sold**: $100,000,000
- **Gross profit**: $88,000,000
**Expenses**:
- **Selling expenses**: $16,000,000
- **Administrative expenses**: $12,000,000
- **Total expenses**: $28,000,000
**Operating income**: $60,000,000
### Division of Costs Between Variable and Fixed
**The division of costs between variable and fixed is as follows**:
| Expense Type | 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 $11,280,000 in yearly fixed costs and $5,000,000 in variable costs. However, this change 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**: $____________
**Instructions**: After inputting the required values, click the "Check My Work" button to verify your answers.
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