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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

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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### 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.
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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