FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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6. Determine the maximum operating income possible with the expanded plant.
4,350,000 x
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?
35,730,000 x Income
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Transcribed Image Text:6. Determine the maximum operating income possible with the expanded plant. 4,350,000 x 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? 35,730,000 x Income
Break-Even Sales Ud Show Me How
Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $187 per unit during the current year. Its income statement is as follows:
Sales
$187,000,000
Cost of goods sold
(101,000,000)
Gross profit
$86,000,000
Expenses:
Selling expenses
$14,000,000
Administrative expenses 11,600,000
Total expenses
(25,600,000)
Operating income
$60,400,000
The division of costs between variable and fixed is as follows:
Variable
Fixed
Cost of goods sold
70%
30%
Selling expenses
75%
25%
Administrative
50%
50%
expenses
Management is considering a plant expansion program for the following year that will permit an increase of $9,350,000 in yearly sales. The expansion will increase fixed costs by $3,500,000 but will not affect
the relationship between sales and variable costs.
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Transcribed Image Text:Break-Even Sales Ud Show Me How Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $187 per unit during the current year. Its income statement is as follows: Sales $187,000,000 Cost of goods sold (101,000,000) Gross profit $86,000,000 Expenses: Selling expenses $14,000,000 Administrative expenses 11,600,000 Total expenses (25,600,000) Operating income $60,400,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 25% Administrative 50% 50% expenses Management is considering a plant expansion program for the following year that will permit an increase of $9,350,000 in yearly sales. The expansion will increase fixed costs by $3,500,000 but will not affect the relationship between sales and variable costs.
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