Need Help I Answer some but stuck.

1. Determine the amount of sales (units) that would be necessary under

   Break-Even Sales Under Present and Proposed Conditions

   Darby Company, operating at full capacity, sold 70,200 units at a price of $57 per unit during the current year. Its income statement for the current year is as follows:

   Sales			$4,001,400
   Cost of goods sold			1,976,000
   Gross profit			$2,025,400
   Expenses:
   Selling expenses	$988,000
   Administrative expenses	988,000
   Total expenses			1,976,000
   Income from operations			$49,400

   The division of costs between fixed and variable 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 that will permit an increase of $342,000 in yearly sales. The expansion will increase fixed costs by $34,200, but will not affect the relationship between sales and Costs that vary in total dollar amount as the level of activity changes.variable costs.

   Required:

   1. Determine the total variable costs and the Costs that tend to remain the same in amount, regardless of variations in the level of activity.total fixed costs for the current year. Enter the final answers rounded to the nearest dollar.

   Total variable costs $2,618,200.00	$
   Total fixed costs $1,333,800.00	$

   2. Determine (a) the unit variable cost and (b) the The dollars available from each unit of sales to cover fixed costs and provide operating profits.unit contribution margin for the current year. Enter the final answers rounded to two decimal places.

   Unit variable cost	$ 37.30
   Unit contribution margin	$ 19.70

   3. Compute the break-even sales (units) for the current year. Enter the final answers rounded to the nearest whole number. units $
   4. Compute the break-even sales (units) under the proposed program for the following year. Enter the final answers rounded to the nearest whole number. units $
   5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $49,400 of income from operations that was earned in the current year. Enter the final answers rounded to the nearest whole number. units $
   6. Determine the maximum income from operations possible with the expanded plant. Enter the final answer rounded to the nearest dollar. $
   7. If the proposal is accepted and sales remain at the current level, what will the income or loss from operations be for the following year? Enter the final answer rounded to the nearest dollar. $ Income $
   • Income
   8. Based on the data given, would you recommend accepting the proposal?
   1. In favor of the proposal because of the reduction in break-even point.
   2. In favor of the proposal because of the possibility of increasing income from operations.
   3. In favor of the proposal because of the increase in break-even point.
   4. Reject the proposal because if future sales remain at the current level, the income from operations will increase.
   5. Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales.

   Choose the correct answer. b

   • a
   • b
   • c
   • d
   • e

   Feedback

   1. Multiply the percentages for fixed and variable costs by each cost.

   2. a. Divide the total variable costs by number of units.

   2. b. Sales price per unit minus variable costs per unit equals contribution margin per unit.

   3. Fixed costs divided by unit contribution margin equals break-even point.

   4. Fixed costs under the proposed program divided by contribution margin equals new break-even point.

   5. (Fixed costs + Target profit) divided by unit contribution margin equals sales units.

   6. Determine the increase in units by dividing the sales increase by the price per unit. Add the additional revenue and additional fixed costs when calculating:

   Sales minus fixed and variable costs equals income from operations.

   7. Subtract the additional fixed costs from the operating income.

   8. Consider the break-even point and the sales needed for the proposed level.

   Learning Objective 2, Learning Objective 3.

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