Question

Determine the amount of sales (units) that would be necessary under Break-Even Sales Under Present and...

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 94,500 units at a price of $81 per unit during the current year. Its income statement for the current year is as follows:

Sales $7,654,500
Cost of goods sold 3,780,000
Gross profit $3,874,500
Expenses:
Selling expenses $1,890,000
Administrative expenses 1,890,000
Total expenses 3,780,000
Income from operations $94,500

The division of costs between fixed and variable is as follows:

Variable Fixed
Cost of goods sold 70% 30%
Selling expenses 75% 25%
Administrative expenses 50% 50%

Management is considering a plant expansion program that will permit an increase of $648,000 in yearly sales. The expansion will increase fixed costs by $64,800, but will not affect the relationship between sales and variable costs.

1. Determine the total variable costs and the total fixed costs for the current year. Enter the final answers rounded to the nearest dollar.

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.

3. Compute the break-even sales (units) for the current year. Enter the final answers rounded to the nearest whole number.

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.

5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $94,500 of income from operations that was earned in the current year. Enter the final answers rounded to the nearest whole number.

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.

8. Based on the data given, would you recommend accepting the proposal?

In favor of the proposal because of the reduction in break-even point.

In favor of the proposal because of the possibility of increasing income from operations.

In favor of the proposal because of the increase in break-even point.

Reject the proposal because if future sales remain at the current level, the income from operations will increase.

Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales.

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Determine the amount of sales (units) that would be necessary under Break-Even Sales Under Present and...
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 120,150 units at a price of $117 per unit during the current year. Its income statement for the current year is as follows: Sales $14,057,550 Cost of goods sold 6,942,000 Gross profit $7,115,550 Expenses: Selling expenses $3,471,000 Administrative expenses 3,471,000 Total expenses 6,942,000 Income from operations $173,550 The division of costs between fixed and variable...
Determine the amount of sales (units) that would be necessary under Break-Even Sales Under Present and...
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 86,400 units at a price of $93 per unit during the current year. Its income statement for the current year is as follows: Sales $8,035,200 Cost of goods sold 3,968,000 Gross profit $4,067,200 Expenses: Selling expenses $1,984,000 Administrative expenses 1,984,000 Total expenses 3,968,000 Income from operations $99,200 The division of costs between fixed and variable...
Determine the amount of sales (units) that would be necessary under Break-Even Sales Under Present and...
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 116,100 units at a price of $84 per unit during the current year. Its income statement for the current year is as follows: Sales $9,752,400 Cost of goods sold 4,816,000 Gross profit $4,936,400 Expenses: Selling expenses $2,408,000 Administrative expenses 2,408,000 Total expenses 4,816,000 Income from operations $120,400 The division of costs between fixed and variable...
Determine the amount of sales (units) that would be necessary under Break-Even Sales Under Present and...
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 108,000 units at a price of $120 per unit during the current year. Its income statement for the current year is as follows: Sales $12,960,000 Cost of goods sold 6,400,000 Gross profit $6,560,000 Expenses: Selling expenses $3,200,000 Administrative expenses 3,200,000 Total expenses 6,400,000 Income from operations $160,000 The division of costs between fixed and variable...
Determine the amount of sales (units) that would be necessary under Break-Even Sales Under Present and...
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 117,450 units at a price of $129 per unit during the current year. Its income statement for the current year is as follows: Sales $15,151,050 Cost of goods sold 7,482,000 Gross profit $7,669,050 Expenses: Selling expenses $3,741,000 Administrative expenses 3,741,000 Total expenses 7,482,000 Income from operations $187,050 The division of costs between fixed and variable...
Determine the amount of sales (units) that would be necessary under Break-Even Sales Under Present and...
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 $114 per unit during the current year. Its income statement for the current year is as follows: Sales $10,619,100 Cost of goods sold 5,244,000 Gross profit $5,375,100 Expenses: Selling expenses $2,622,000 Administrative expenses 2,622,000 Total expenses 5,244,000 Income from operations $131,100 The division of costs between fixed and variable...
Determine the amount of sales (units) that would be necessary under Break-Even Sales Under Present and...
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 71,550 units at a price of $69 per unit during the current year. Its income statement for the current year is as follows: Sales $4,936,950 Cost of goods sold 2,438,000 Gross profit $2,498,950 Expenses: Selling expenses $1,219,000 Administrative expenses 1,219,000 Total expenses 2,438,000 Income from operations $60,950 The division of costs between fixed and variable...
Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 118,500 units...
Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 118,500 units at a price of $45 per unit during the current year. Its income statement is as follows: Sales $5,332,500 Cost of goods sold 1,890,000 Gross profit $3,442,500 Expenses: Selling expenses $945,000 Administrative expenses 570,000 Total expenses 1,515,000 Income from operations $1,927,500 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50%...
Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 165,500 units...
Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 165,500 units at a price of $117 per unit during the current year. Its income statement is as follows: Sales $19,363,500 Cost of goods sold 6,864,000 Gross profit $12,499,500 Expenses: Selling expenses $3,432,000 Administrative expenses 2,067,000 Total expenses 5,499,000 Income from operations $7,000,500 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50%...
I ONLY NEED THE ANSWER TO QUESTION 7, THANK YOU Determine the amount of sales (units)...
I ONLY NEED THE ANSWER TO QUESTION 7, THANK YOU 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 89,100 units at a price of $105 per unit during the current year. Its income statement for the current year is as follows: Sales $9,355,500 Cost of goods sold 4,620,000 Gross profit $4,735,500 Expenses: Selling expenses $2,310,000 Administrative expenses 2,310,000 Total expenses 4,620,000 Income from...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT