Management is considering a plant expansion program that will permit an increase of $8,631,000 (35,000 units at $246.60 per unit) in yearly sales. The expansion will increase fixed costs by $3,600,000, but will not affect the relationship between sales and variable costs.

Instructions:

1. Determine for 20Y5 the total fixed costs and the total variable costs.

Total fixed costs	$
Total variable costs	$

2. Determine for 20Y5 (a) the unit variable cost and (b) the unit contribution margin.

a. Unit variable cost	$ per unit
b. Unit contribution margin per unit	$

3. Compute the break-even sales (units) for 20Y5.
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 $43,140,000 of income from operations that was earned in 20Y5.
units

6. Determine the maximum income from operations possible with the expanded plant.
$

7. If the proposal is accepted and sales remain at the 20Y5 level, what will the income or loss from operations be for 20Y6?
$