6. Determine the maximum operating income possible with the expanded plant.

Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $186 per unit during the current year. Its income statement is as follows:

Sales			$186,000,000
Cost of goods sold			(98,000,000)
Gross profit			$88,000,000
Expenses:
Selling expenses	$16,000,000
Administrative expenses	10,800,000
Total expenses			(26,800,000)
Operating income			$61,200,000

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

	Variable		Fixed
Cost of goods sold	70%		30%
Selling expenses	75%		25%
Administrative expenses	50%		50%

Management is considering a plant expansion program for the following year that will permit an increase of $13,020,000 in yearly sales. The expansion will increase fixed costs by $5,000,000 but will not affect the relationship between sales and variable costs.