Break-Even Sales Under Present and Proposed Conditions
Battonkill Company, operating at full capacity, sold 129,600units at a price of $120 per unit during 2012. Its income statementfor 2012 is as follows:
Sales $15,552,000 Cost of goods sold 5,520,000 Gross profit $10,032,000 Expenses: Selling expenses $2,760,000 Administrative expenses 1,640,000 Total expenses 4,400,000 Income from operations $5,632,000
The division of costs between fixedcosts and variable costs is asfollows:
Fixed Variable Cost of goods sold 40% 60% Selling expenses 50% 50% Administrative expenses 70% 30%
Management is considering a plant expansion program that willpermit an increase of $1,560,000 in yearly sales. The expansionwill increase fixed costs by $208,000, but will not affect therelationship between sales and variable costs.
Instructions:
1. Determine for 2012 the total fixed costs and the total variablecosts.
Total fixed costs: $ Total variable costs: $
2. Determine for 2012 (a) the unit variablecost and (b) the unit contributionmargin.
Unit variable cost: $ Unit contribution margin: $
3. Compute the break-even sales (units) for2012.
units
4. Compute the break-even sales (units) underthe proposed program
units
5. Determine the amount of sales (units) thatwould be necessary under the proposed program to realize the$5,632,000 of income from operations that was earned in 2012.
units
6. Determine the maximum income from operationspossible with the expanded plant.
$
7. If the proposal is accepted and sales remainat the 2012 level, what will the income or loss from operations befor 2013?
$
Break-Even Sales Under Present and Proposed Conditions
Battonkill Company, operating at full capacity, sold 129,600units at a price of $120 per unit during 2012. Its income statementfor 2012 is as follows:
| Sales | $15,552,000 | ||
| Cost of goods sold | 5,520,000 | ||
| Gross profit | $10,032,000 | ||
| Expenses: | |||
| Selling expenses | $2,760,000 | ||
| Administrative expenses | 1,640,000 | ||
| Total expenses | 4,400,000 | ||
| Income from operations | $5,632,000 |
The division of costs between fixedcosts and variable costs is asfollows:
| Fixed | Variable | |||
|---|---|---|---|---|
| Cost of goods sold | 40% | 60% | ||
| Selling expenses | 50% | 50% | ||
| Administrative expenses | 70% | 30% | ||
Management is considering a plant expansion program that willpermit an increase of $1,560,000 in yearly sales. The expansionwill increase fixed costs by $208,000, but will not affect therelationship between sales and variable costs.
Instructions:
1. Determine for 2012 the total fixed costs and the total variablecosts.
| Total fixed costs: | $ |
| Total variable costs: | $ |
2. Determine for 2012 (a) the unit variablecost and (b) the unit contributionmargin.
| Unit variable cost: | $ |
| Unit contribution margin: | $ |
3. Compute the break-even sales (units) for2012.
units
4. Compute the break-even sales (units) underthe proposed program
units
5. Determine the amount of sales (units) thatwould be necessary under the proposed program to realize the$5,632,000 of income from operations that was earned in 2012.
units
6. Determine the maximum income from operationspossible with the expanded plant.
$
7. If the proposal is accepted and sales remainat the 2012 level, what will the income or loss from operations befor 2013?
$
Related questions
Break-Even Sales Under Present and Proposed Conditions
Battonkill Company, operating at full capacity, sold 172,900units at a price of $126 per unit during 2014. Its income statementfor 2014 is as follows:
| Sales | $21,785,400 | ||
| Cost of goods sold | 7,728,000 | ||
| Gross profit | $14,057,400 | ||
| Expenses: | |||
| Selling expenses | $3,864,000 | ||
| Administrative expenses | 2,310,000 | ||
| Total expenses | 6,174,000 | ||
| Income from operations | $7,883,400 |
The division of costs between fixed and variable is asfollows:
| Fixed | Variable | |||
| Cost of goods sold | 40% | 60% | ||
| Selling expenses | 50% | 50% | ||
| Administrative expenses | 70% | 30% | ||
Management is considering a plant expansion program that willpermit an increase of $2,142,000 in yearly sales. The expansionwill increase fixed costs by $285,600, but will not affect therelationship between sales and variable costs.
Required: PLEASE JUST ANSWER QUESTIONS 5,67
1. Determine for 2014 the total fixed costs andthe total variable costs.
| Total fixed costs | $ |
| Total variable costs | $ |
2. Determine for 2014 (a) the unit variablecost and (b) the unit contribution margin.
| Unit variable cost | $ |
| Unit contribution margin | $ |
3. Compute the break-even sales (units) for2014.
units
4. Compute the break-even sales (units) underthe proposed program.
units
5. Determine the amount of sales (units) thatwould be necessary under the proposed program to realize the$7,883,400 of income from operations that was earned in 2014.
units
6. Determine the maximum income from operationspossible with the expanded plant.
$
7. If the proposal is accepted and sales remainat the 2014 level, what will the income or loss from operations befor 2015?
$
Break-Even Sales Under Present and Proposed Conditions
Battonkill Company, operating at full capacity, sold 172,900units at a price of $126 per unit during 2014. Its income statementfor 2014 is as follows:
| Sales | $21,785,400 | ||
| Cost of goods sold | 7,728,000 | ||
| Gross profit | $14,057,400 | ||
| Expenses: | |||
| Selling expenses | $3,864,000 | ||
| Administrative expenses | 2,310,000 | ||
| Total expenses | 6,174,000 | ||
| Income from operations | $7,883,400 |
The division of costs between fixed and variable is asfollows:
| Fixed | Variable | |||
| Cost of goods sold | 40% | 60% | ||
| Selling expenses | 50% | 50% | ||
| Administrative expenses | 70% | 30% | ||
Management is considering a plant expansion program that willpermit an increase of $2,142,000 in yearly sales. The expansionwill increase fixed costs by $285,600, but will not affect therelationship between sales and variable costs.
Required:
1. Determine for 2014 the total fixed costs andthe total variable costs.
| Total fixed costs | $ |
| Total variable costs | $ |
2. Determine for 2014 (a) the unit variablecost and (b) the unit contribution margin.
| Unit variable cost | $ |
| Unit contribution margin | $ |
3. Compute the break-even sales (units) for2014.
units
4. Compute the break-even sales (units) underthe proposed program.
units
5. Determine the amount of sales (units) thatwould be necessary under the proposed program to realize the$7,883,400 of income from operations that was earned in 2014.
units
6. Determine the maximum income from operationspossible with the expanded plant.
$
7. If the proposal is accepted and sales remainat the 2014 level, what will the income or loss from operations befor 2015?
$ SelectIncomeLoss
Battonkill Company, operating at full capacity, sold 154,100units at a price of $48 per unit during the current year. Itsincome statement for the current year is as follows:
| Sales | $7,396,800 | ||
| Cost of goods sold | 2,624,000 | ||
| Gross profit | $4,772,800 | ||
| Expenses: | |||
| Selling expenses | $1,312,000 | ||
| Administrativeexpenses | 784,000 | ||
| Total expenses | 2,096,000 | ||
| Income from operations | $2,676,800 |
The division of costs between fixed and variable is asfollows:
| Fixed | Variable | |||
| Cost of goods sold | 40% | 60% | ||
| Selling expenses | 50% | 50% | ||
| Administrative expenses | 70% | 30% | ||
Management is considering a plant expansion program that willpermit an increase of $576,000 in yearly sales. The expansion willincrease fixed costs by $76,800, but will not affect therelationship between sales and variable costs.
Required:
1. Determine for the current year the totalfixed costs and the total variable costs.
| Total fixed costs | $ |
| Total variable costs | $ |
2. Determine (a) the unit variable cost and (b)the unit contribution margin for the current year.
| Unit variable cost | $ |
| Unit contribution margin | $ |
3. Compute the break-even sales (units) for thecurrent year.
units
4. Compute the break-even sales (units) underthe proposed program.
units
5. Determine the amount of sales (units) thatwould be necessary under the proposed program to realize the$2,676,800 of income from operations that was earned in the currentyear.
units
6. Determine the maximum income from operationspossible with the expanded plant.
$
7. If the proposal is accepted and sales remainat the current level, what will the income or loss from operationsbe for the following year?
$ Income
