break even sales under present and proposed conditions Student Lo and 11-2 O Bre
ID: 2562823 • Letter: B
Question
break even sales under present and proposed conditions Student Lo and 11-2 O Break-Even Sales Under Present and Proposed Conditions Kearney Company, operating t ful capacity, old 40000 nts tpric of 246.6 r uit duning 20%5. its Income satement 46.60 per unit during 20Y5. Its income statement for 20YS is as follows $98,640,000 Cost of goods sold Gross profit Expenses: $54,140,000 Selling expenses Administrative expenses $8,000,000 3,000,000 11,000,000 43,140,000 Income from operations The division of costs between fixed and variable is as follows: Fixed Varlable Cost of goods sold 25% Management is considering a plant expansion program that t will permit an increase of $8,631,000 (35,000 units at $246.60 per unit) in yearly sales. The expansion wil i costs by $3,600,000, but will not affect the relationship between sales and variable costs. 1. Determine for 20YS the total fixed costs and the total variable costs. 880000 2068000 Total variable costsExplanation / Answer
1.
Total Fixed Cost $ 16,860,000
Total Variable Cost $ 38,640,000
2.
a.Units variable cost per unit = $ 96.6
b. MArgin per unit
3.Compute breakeven sales under 20Y5
4. Breakeven sales under proposed plan
5. Units to earn profit under new plan
Units Price Per unit price Variable Cost Variable Cost/ Per Unit Fixed Cost Sales 400,000 $ 98,640,000 $ 246.60 Cost of Goods sold 400,000 $ 44,500,000 $ 111.25 $ 32,040,000 $ 80.10 $ 12,460,000 Gross profit 400,000 $ 54,140,000 $ 135.35 Expenses Seelling exp 400,000 $ 8,000,000 $ 20.00 $ 6,000,000 $ 15.00 $ 2,000,000 Admin exp 400,000 $ 3,000,000 $ 7.50 $ 600,000 $ 1.50 $ 2,400,000 Total exp 400,000 $ 11,000,000 $ 27.50 Income from Operation 400,000 $ 43,140,000 $ 107.85 Total $ 38,640,000 $ 96.60 $ 16,860,000Related Questions
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