Homework Help is Here – Start Your Trial Now!
Business
Accounting
Break-Even Sales Under Present and Proposed Conditions 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% 50% 50% expenses Management is considering a plant expansion program for the following year that will permit an increase of $11,220,000 in yearly sales. The expansion will increase fixed costs by $4,500,000 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. Total variable costs 87,000,000 Total fixed costs 39,600,000 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Unit variable cost 87 Unit contribution margin 100 3. Compute the break-even sales (units) for the current year. 396,000 V units 4. Compute the break-even sales (units) under the proposed program for the following year. 441,000 V units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $60,400,000 of operating income that was earned in the current year. units 6. Determine the maximum operating income possible with the expanded plant. 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? Income v

Break-Even Sales Under Present and Proposed Conditions 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% 50% 50% expenses Management is considering a plant expansion program for the following year that will permit an increase of $11,220,000 in yearly sales. The expansion will increase fixed costs by $4,500,000 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. Total variable costs 87,000,000 Total fixed costs 39,600,000 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Unit variable cost 87 Unit contribution margin 100 3. Compute the break-even sales (units) for the current year. 396,000 V units 4. Compute the break-even sales (units) under the proposed program for the following year. 441,000 V units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $60,400,000 of operating income that was earned in the current year. units 6. Determine the maximum operating income possible with the expanded plant. 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? Income v

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Looking for answers to 5-7 only. Answers to 1-4 provided for reference only. Thanks!

Break-Even Sales Under Present and Proposed Conditions 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% 50% 50% expenses Management is considering a plant expansion program for the following year that will permit an increase of $11,220,000 in yearly sales. The expansion will increase fixed costs by $4,500,000 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. Total variable costs 87,000,000 Total fixed costs 39,600,000 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Unit variable cost 87 Unit contribution margin 100 3. Compute the break-even sales (units) for the current year. 396,000 V units 4. Compute the break-even sales (units) under the proposed program for the following year. 441,000 V units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $60,400,000 of operating income that was earned in the current year. units 6. Determine the maximum operating income possible with the expanded plant. 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? Income v
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 $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% 50% 50% expenses Management is considering a plant expansion program for the following year that will permit an increase of $11,220,000 in yearly sales. The expansion will increase fixed costs by $4,500,000 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. Total variable costs 87,000,000 Total fixed costs 39,600,000 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Unit variable cost 87 Unit contribution margin 100 3. Compute the break-even sales (units) for the current year. 396,000 V units 4. Compute the break-even sales (units) under the proposed program for the following year. 441,000 V units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $60,400,000 of operating income that was earned in the current year. units 6. Determine the maximum operating income possible with the expanded plant. 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? Income v
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Techniques of Time Value Of Money
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS