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Break-Even Sales Under Present and Proposed Conditions Kearney Company, operating at full capacity, sold 152,400 units at a price of $123 per unit during 20 Y5. Its income statement for 20 Y5 is as follows: The division of costs between fixed and variable is as follows: Management is considering a plant expansion program that well permit an increase of $1,476,000 (12,000 units at $123 per unit) in yearif sales, The expansion will increase fixed costs by $196,300, but wid not affect the relationchip between sales and variable costh. Instructions! 1. Determine for 20y5 the total fixed costs and the total variable coats. 1. Determine for 20%5 the total fored costs and the total varlable costs. 2. Determine for 20 rs (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 20 \%5. 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 $6,773,200 of operating income that was earned in 205. units 6. Determine the maximum operating income possible with the expanded plant. 7. If the proposal is accepted and sales remain at the 20ys level, what will be the operating income or loss for 20ra ? 8. Assuming a lack of market research, disadvantages for expanding the plant include all of the following except: a. The break-even point increases. b. The saies necessary to maintain the current income from operations must increase in excess of 20r5 sales. c. If future sales remain at the 20y5 level, the income from operations will decline. d. The maximum income from operations posslole with the expanded plant is less than the current income from operations

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