Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 143,000 units at a price of $111 per unit during the current year. Its income statement is as follows: Sales Cost of goods sold $15,873,000 5,624,000 Gross profit Expenses: Selling expenses $2,812,000 Administrative expenses 1,702,000 Total expenses $10,249,000 4,514,000 $5,735,000 Income from operations The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative 30% 70% expenses Management is considering a plant expansion program for the following year that will permit an increase of $1,443,000 in yearly sales. The expansion will increase fixed costs by $192,400, but will not affect the relationship between sales and variable costs. Required: 5. Determine the amount of sales (units) that would be 1. Determine the total variable costs and the total fixed costs for the current ye that was earned in the current year. Total variable costs Total fixed costs 5,291,000 4,847,000 ✔ 2. Determine (a) the unit variable cost and (b) the unit contribution margin for t Unit variable cost Unit contribution margin 37 74 145,600 units 6. Determine the maximum income from operations poss 4,556 X 3. Compute the break-even sales (units) for the current year. 65,500 units 7. If the proposal is accepted and sales remain at the a 5,542,600 Income ✓ 4. Compute the break-even sales (units) under the proposed program for the fi 8. Based on the data given, would you recommend acce 68,100 units a. In favor of the proposal because of the reduction in b 5. Determine the amount of sales (units) that would be necessary under the pr b. In favor of the proposal because of the possibility of i that was earned in the current year. 145,600 units c. In favor of the proposal because of the increase in br d. Reject the proposal because if future sales remain at 6. Determine the maximum income from operations possible with the expanded e. Reject the proposal because the sales necessary to m 4,556 X Choose the correct answer. 7. If the proposal is accepted and sales remain at the current level, what will th 5,542,600 Income b

Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 143,000 units at a price of $111 per unit during the current year. Its income statement is as follows: Sales Cost of goods sold $15,873,000 5,624,000 Gross profit Expenses: Selling expenses $2,812,000 Administrative expenses 1,702,000 Total expenses $10,249,000 4,514,000 $5,735,000 Income from operations The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative 30% 70% expenses Management is considering a plant expansion program for the following year that will permit an increase of $1,443,000 in yearly sales. The expansion will increase fixed costs by $192,400, but will not affect the relationship between sales and variable costs. Required: 5. Determine the amount of sales (units) that would be 1. Determine the total variable costs and the total fixed costs for the current ye that was earned in the current year. Total variable costs Total fixed costs 5,291,000 4,847,000 ✔ 2. Determine (a) the unit variable cost and (b) the unit contribution margin for t Unit variable cost Unit contribution margin 37 74 145,600 units 6. Determine the maximum income from operations poss 4,556 X 3. Compute the break-even sales (units) for the current year. 65,500 units 7. If the proposal is accepted and sales remain at the a 5,542,600 Income ✓ 4. Compute the break-even sales (units) under the proposed program for the fi 8. Based on the data given, would you recommend acce 68,100 units a. In favor of the proposal because of the reduction in b 5. Determine the amount of sales (units) that would be necessary under the pr b. In favor of the proposal because of the possibility of i that was earned in the current year. 145,600 units c. In favor of the proposal because of the increase in br d. Reject the proposal because if future sales remain at 6. Determine the maximum income from operations possible with the expanded e. Reject the proposal because the sales necessary to m 4,556 X Choose the correct answer. 7. If the proposal is accepted and sales remain at the current level, what will th 5,542,600 Income b

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 14P

See similar textbooks