Question

In: Accounting

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 87,750 units at a price of $57 per unit during the current year. Its income statement for the current year is as follows: Sales $5,001,750 Cost of goods sold 2,470,000 Gross profit $2,531,750 Expenses: Selling expenses $1,235,000 Administrative expenses 1,235,000 Total expenses 2,470,000 Income from operations $61,750 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 $399,000 in yearly sales. The expansion will increase fixed costs by $39,900, but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs for the current year. Enter the final answers rounded to the nearest dollar. Total variable costs $ 3,272,750 Total fixed costs $ 1,667,250 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. Unit variable cost $ 37.30 Unit contribution margin $ 19.70 3. Compute the break-even sales (units) for the current year. Enter the final answers rounded to the nearest whole number. 84,632 units 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. 86,657 units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $61,750 of income from operations that was earned in the current year. Enter the final answers rounded to the nearest whole number. 89,792 units 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.

Solutions

Expert Solution

As per policy, only four parts of a question is allowed to answer, so answering first five parts here:

1) Breaking down of costs into variable and fixed:
Variable Fixed Total
COGS 1729000 741000 2470000
selling expenses 926250 308750 1235000
Admin exp 617500 617500 1235000
Total 3272750 1667250 4940000
2) Units sold 87750
a) Unit variable cost = 3272750/87750 = $37.30
Unit selling price = $57
Contribution = SP - VC = 57 - 37.30 = 19.70
3) BEP (current year) = Total FC / contribution per unit = 1667250/19.70 = 84632 units
4) BEP (proposed) = Total FC / contribution per unit = (1667250+39900) /19.70 = 86657 units

5) Units to be sold for proposed gain = FC + Proposed gain / Contribution per unit =

(1667250+39900+61750) /19.70 = 89792 units

====


Related Solutions

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 91,800 units at a price of $90 per unit during the current year. Its income statement for the current year is as follows: Sales $8,262,000 Cost of goods sold 4,080,000 Gross profit $4,182,000 Expenses: Selling expenses $2,040,000 Administrative expenses 2,040,000 Total expenses 4,080,000 Income from operations $102,000 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 116,100 units at a price of $108 per unit during the current year. Its income statement for the current year is as follows: Sales $12,538,800 Cost of goods sold 6,192,000 Gross profit $6,346,800 Expenses: Selling expenses $3,096,000 Administrative expenses 3,096,000 Total expenses 6,192,000 Income from operations $154,800 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 99,900 units at a price of $108 per unit during the current year. Its income statement for the current year is as follows: Sales $10,789,200 Cost of goods sold 5,328,000 Gross profit $5,461,200 Expenses: Selling expenses $2,664,000 Administrative expenses 2,664,000 Total expenses 5,328,000 Income from operations $133,200 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 113,400 units at a price of $99 per unit during the current year. Its income statement for the current year is as follows: Sales $11,226,600 Cost of goods sold 5,544,000 Gross profit $5,682,600 Expenses: Selling expenses $2,772,000 Administrative expenses 2,772,000 Total expenses 5,544,000 Income from operations $138,600 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 72,900 units at a price of $45 per unit during the current year. Its income statement for the current year is as follows: Sales $3,280,500 Cost of goods sold 1,620,000 Gross profit $1,660,500 Expenses: Selling expenses $810,000 Administrative expenses 810,000 Total expenses 1,620,000 Income from operations $40,500 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 79,650 units at a price of $51 per unit during the current year. Its income statement for the current year is as follows: Sales $4,062,150 Cost of goods sold 2,006,000 Gross profit $2,056,150 Expenses: Selling expenses $1,003,000 Administrative expenses 1,003,000 Total expenses 2,006,000 Income from operations $50,150 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 83,700 units at a price of $75 per unit during the current year. Its income statement for the current year is as follows: Sales $6,277,500 Cost of goods sold 3,100,000 Gross profit $3,177,500 Expenses: Selling expenses $1,550,000 Administrative expenses 1,550,000 Total expenses 3,100,000 Income from operations $77,500 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 125,550 units at a price of $135 per unit during the current year. Its income statement for the current year is as follows: Sales $16,949,250 Cost of goods sold 8,370,000 Gross profit $8,579,250 Expenses: Selling expenses $4,185,000 Administrative expenses 4,185,000 Total expenses 8,370,000 Income from operations $209,250 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 113,400 units at a price of $66 per unit during the current year. Its income statement for the current year is as follows: Sales $7,484,400 Cost of goods sold 3,696,000 Gross profit $3,788,400 Expenses: Selling expenses $1,848,000 Administrative expenses 1,848,000 Total expenses 3,696,000 Income from operations $92,400 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 99,900 units at a price of $108 per unit during the current year. Its income statement for the current year is as follows: Sales $10,789,200 Cost of goods sold 5,328,000 Gross profit $5,461,200 Expenses: Selling expenses $2,664,000 Administrative expenses 2,664,000 Total expenses 5,328,000 Income from operations $133,200 The division of costs between fixed and variable...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT