- Company A is operating at full capacity, sold 45,600 unitsduring the current year. Its income statement is as follows:
Sales | | | $5,654,400 |
Cost of goods sold | | | 3,618,816 |
Gross profit | | | $2,035,584 |
Expenses: | | | |
Selling expenses | $984,000 | | |
Administrative expenses | 430,000 | | |
Total expenses | | | 1,414,000 |
Income from operations | | | $ 621,584 |
The division of costs between variable and fixed is as follows:(round to nearest dollar)
| Variable | Fixed |
Cost of goods sold | 70% | | 30% | |
Selling expenses | 20% | | 80% | |
Administrative expenses | 10% | | 90% | |
Management is planning to increase the unit sales price by $3each, no change to the variable cost, but adding additional fixedcost of $25,000.
- a. Determine the total variable costs andb. the total fixed costs for the currentyear.
- a. Compute the break-even sales units andb. dollar sales for the current year. (round tonearest unit/dollar)
- a. Compute the break-even sales units andb. dollar sales under the proposed program for thefollowing year. (round to nearest unit/dollar)
- How many units would have to be sold, under the proposedprogram, to generate income from operations of $965,500 (round tonearest unit).
