1.Based on the data given in the previous problem, would you recommend accepting the proposal?

Miami Corporation was operating at full capacity; they sold 500,000 units at $94 each during the current year. Their income statement is as follows: Sales Cost of Goods Sold 47,000,000 25,000,000 22,000,000 Gross Profit 4,000,000 3,000,000 Selling Expenses Admin Expenses Total Expenses Income from Operations 7,000,000 $15,000,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 70% 30% 75% 25% Selling expenses Administrative expenses 50% 50% Management is considering a plant expansion program for the following year that will permit an increase of $3,760,000 in yearly sales. The expansion will increase fixed costs by $1,800,000 but will not affect the relationship between sales and variable costs