I ONLY need answers for 6 and 7! Thank you! Determine the amount of sales (units

Question

I ONLY need answers for 6 and 7! Thank you!

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 89,100 units at a price of $105 per unit during the current year. Its income statement for the current year is as follows:

The division of costs between fixed and variable is as follows:

Management is considering a plant expansion program that will permit an increase of $735,000 in yearly sales. The expansion will increase fixed costs by $73,500, 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.

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.

3. Compute the break-even sales (units) for the current year. Enter the final answers rounded to the nearest whole number.
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.
units

5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $115,500 of income from operations that was earned in the current year. Enter the final answers rounded to the nearest whole number.
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.
$ Income

Sales $9,355,500 Cost of goods sold 4,620,000 Gross profit $4,735,500 Expenses: Selling expenses $2,310,000 Administrative expenses 2,310,000 Total expenses 4,620,000 Income from operations $115,500

Explanation / Answer

(6)CALCULATION OF VERIABLECOST PER UNIT & CONTRIBUTION MARGIN

veriable cost per unit = 6121500/89100

= 68.70$

contribution margin = selling price - veriable cost

= 105-68.70

= 36.30

CM ratio = CM/SP*100

= 36.30/105*100

= 34.57%

Calculation of maximum profit fom expanstion useing CM ratio

Increase in sales = 735000$

contribution = 735000*34.57%

= 254090$

profit = contribution - fixed cost

= 254090- 73500

= 180590$

(7) statement showing income or loss from operations

particulars % veriable $ fixed $ cost of goods sold 70:30 3234000 1386000 selling expenses 75:25 1732500 577500 administrative expenses 50:50 1155000 1155000 Total 6121500 3118500

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