FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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 83,700 units at a price of $48 per unit during the current year. Its income statement for the current year is as follows:
|
Sales |
|
|
$4,017,600 |
|
Cost of goods sold |
|
|
1,984,000 |
|
Gross profit |
|
|
$2,033,600 |
|
Expenses: |
|
|
|
|
Selling expenses |
$992,000 |
|
|
|
Administrative expenses |
992,000 |
|
|
|
Total expenses |
|
|
1,984,000 |
|
Income from operations |
|
|
$49,600 |
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 $336,000 in yearly sales. The expansion will increase fixed costs by $33,600, but will not affect the relationship between sales and variable costs.
- Determine the maximum income from operations possible with the expanded plant. Answer rounded to the nearest dollar.
$___________
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