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6. Determine the maximum operating income possible with the expanded plant. 4,350,000 x 7. If the proposal is accepted and sales remain at the current level, what will the operating income or loss be for the following year? 35,730,000 x Income

6. Determine the maximum operating income possible with the expanded plant. 4,350,000 x 7. If the proposal is accepted and sales remain at the current level, what will the operating income or loss be for the following year? 35,730,000 x Income

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
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6. Determine the maximum operating income possible with the expanded plant. 4,350,000 x 7. If the proposal is accepted and sales remain at the current level, what will the operating income or loss be for the following year? 35,730,000 x Income
Transcribed Image Text:6. Determine the maximum operating income possible with the expanded plant. 4,350,000 x 7. If the proposal is accepted and sales remain at the current level, what will the operating income or loss be for the following year? 35,730,000 x Income
Break-Even Sales Ud Show Me How Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $187 per unit during the current year. Its income statement is as follows: Sales $187,000,000 Cost of goods sold (101,000,000) Gross profit $86,000,000 Expenses: Selling expenses $14,000,000 Administrative expenses 11,600,000 Total expenses (25,600,000) Operating income $60,400,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 25% Administrative 50% 50% expenses Management is considering a plant expansion program for the following year that will permit an increase of $9,350,000 in yearly sales. The expansion will increase fixed costs by $3,500,000 but will not affect the relationship between sales and variable costs.
Transcribed Image Text:Break-Even Sales Ud Show Me How Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $187 per unit during the current year. Its income statement is as follows: Sales $187,000,000 Cost of goods sold (101,000,000) Gross profit $86,000,000 Expenses: Selling expenses $14,000,000 Administrative expenses 11,600,000 Total expenses (25,600,000) Operating income $60,400,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 25% Administrative 50% 50% expenses Management is considering a plant expansion program for the following year that will permit an increase of $9,350,000 in yearly sales. The expansion will increase fixed costs by $3,500,000 but will not affect the relationship between sales and variable costs.
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