Break-Even Sales Under Present and Proposed Conditions Howard Industries Inc., operating at full capacity, sold 64,000 units at a price of $45 per unit during the current year. Its income statement is as follows: Sales $2,880,000 Cost of goods sold 1,400,000 Gross profit $1,480,000 Expenses: Selling expenses $400,000 Administrative expenses 387,500 Total expenses 787,500 Income from operations $ 692,500 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 75% 25% Selling expenses 60% 40% Administrative expenses 80% 20% Management is considering a plant expansion program for the following year that will permit an increase of $900,000 in yearly sales. The expansion will increase fixed costs by $212,500 but will not affect the relationship between sales and variable costs. Required: 1. Determine the total fixed costs and the total variable costs for the current year. Total variable costs $ Total fixed costs $ 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Unit variable cost $ Unit contribution margin $ 3. Compute the break-even sales (units) for the current year. units 4. Compute the break-even sales (units) under the proposed program for the following year. units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $692,500 of income from operations that was earned in the current year. units 6. Determine the maximum income from operations possible with the expanded plant. $ 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? $

Name: Techwhiff
Address: 1520 Lavalette Ave, Elkins, WV 26241, USA, Elkins, 26241, US
Telephone: +1 681-298-8325
Price range: 10000

Determine the Total Variable Cost and the total fixed Costs Total Variable cost 1530000 Total Fixed Cost 657500 21. Units Varaible Cost and Unit Contribution Margin Unit Variable Cost Variable Cost/Units) 23.91 Unit Contribution Margin 21.09 (Sales - Variable Cost)/units 3 Break even sales in units (Fixed cost / CM per unit) 31176 Units Break Even Sales under proposed Program Fixed Cost(657500+212500) 870000 Break Even units (Fixedc ost/CM per unit) 41252 5 Sales units to Sell to get $692500 income From operations (Fixed cost+ Terget income)/CM per unit 74087 Units 6 Detemine the Maximum Income from operations from the Expanded Plant Maximum sales Revenue 2880000+900000 3780000 Maximum Units Can sold 84000 Fixed Cost(657500+212500) 870000 operating Income = Units * CM per unit - Fixed Cost = 901560 Answer 7 Proposal is Acepted and Sales Remains the Sales operating Income = Units * CM per unit - Fixed Cost = 480000 income 8 Would you recommend Accepting the Proposal B) In Favor of the Proposal because of the possibility of increasing income from operations 64000 451 2880000 1400000 1480000 Saels Units Selling price per unit Sales Cost of goods sold Gross Profit Expenses Sellin gexpenses Administraative Expenses total Expenses Income From operations 400000 387500 787500 6925000 Cost of goods sold Sellin gexpenses Administraative Expenses Total Division of Fixed and Variable Cost Variable Fixed cost 70%| 980000 30% 60% 240000| 40% 80% 310000 20% 1530000 Proposed programme 900000 fixed cost Increase 420000 160000 77500 657500 Sales Will increase 212500 .

Break-Even Sales Under Present and Proposed Condition…

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Determine the Total Variable Cost and the total fixed Costs Total Variable cost 1530000 Total Fixed Cost 657500 21. Units Var

64000 451 2880000 1400000 1480000 Saels Units Selling price per unit Sales Cost of goods sold Gross Profit Expenses Sellin ge

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Sales		$2,880,000
Cost of goods sold		1,400,000
Gross profit		$1,480,000
Expenses:
Selling expenses	$400,000
Administrative expenses	387,500
Total expenses		787,500
Income from operations		$ 692,500

	Variable	Fixed
Cost of goods sold	75%	25%
Selling expenses	60%	40%
Administrative expenses	80%	20%

Break-Even Sales Under Present and Proposed Conditions Howard Industries Inc., operating at full capacity, sold 64,000...

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