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Break-Even Sales Under Present and Proposed Conditions




Question;Break-Even Sales Under Present and Proposed;Conditions;Armstrong Company, operating at full capacity;sold 80,000 units at a price of $124 per unit during 2012. Its income statement;for 2012 is as follows;The division of costs betweenfixed costsandvariable costsis as follows;Management is considering a plant expansion;program that will permit an increase of $2,480,000 in yearly sales. The;expansion will increase fixed costs by $272,000, but will not affect the;relationship between sales and variable costs.;Instructions;1.;Determine for 2012 the total fixed costs and the total variable;costs.;Total fixed costs;$;Total variable costs;$;2.;Determine for 2012 (a) the unit variable cost and (b) theunit contribution margin.;Unit variable cost;$;Unit contribution margin;$;3.;Compute the break-even sales (units) for 2012.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 $1,100,000 of income from operations;that was earned in 2012.units;6.;Determine the maximum income from operations possible with the;expanded plant.;$;7.;If the proposal is accepted and sales remain at the 2012 level, what;will the income or loss from operations be for 2013?;$Select;Income;Loss


Paper#41992 | Written in 18-Jul-2015

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