Reference no: EM132500463

Question 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 102,600 units at a price of $72 per unit during the current year.

Its income statement for the current year is as follows:

Sales $7,387,200

Cost of goods sold 3,648,000

Gross profit $3,739,200

Expenses: Selling expenses$1,824,000

Administrative expenses1,824,000

Total expenses 3,648,000

Income from operations $91,200

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

VariableFixedCost of goods sold70% 30%

Selling expenses75% 25%

Administrative expenses50% 50%

Management is considering a plant expansion program that will permit an increase of $576,000 in yearly sales. The expansion will increase fixed costs by $57,600, but will not affect the relationship between sales and variable costs.