accounting 2

Project Description:

problem 21-2b
break-even sales under present and proposed conditions
colt industries inc., operating at full capacity, sold 30,000 units at a price of $56 per unit during 2012. its income statement for 2012 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 $1,120,000 in yearly sales. the expansion will increase fixed costs by $400,000, but will not affect the relationship between sales and variable costs.
instructions:
1. determine for 2012 the total fixed costs and the total variable costs.
fixed costs: $
variable costs: $
2. determine for 2012 (a) the unit variable cost and (b) the unit contribution margin.
unit variable cost: $
unit contribution margin: $
3. compute the break-even sales (units) for 2012.
units
4. compute the break-even sales (units) under the proposed program.
units
5. determine the amount of sales (units) that would be necessary under the proposed program to realize the $544,000 of income from operations that was earned in 2012.
units
6. determine the maximum income from operations possible with the expanded plant.
$
7. if the proposal is accepted and sales remain at the 2012 level, what will the income or loss from operations be for 2013?
$
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