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Break-even sales under present and proposed conditions

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1. Determine for 2003 the total fixed cost and the total variable cost.
2. Determine for 2003 (a) the unit variable cost and (b) the unit contribution margin.
3. Compute the break-even sales (units) for 2003
4. Compute the break-even sales (units) under the proposed program
5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $1,640,000 of income from operations that was earned in 2003.
6. Determine the maximum income from operations possible with the expanded plant.
7. If the proposal is accepted and sales remain at the 2003 level, what will the income or loss from operations be for 2004?
8. Based on the data given, would you recommend accepting the proposal? Explain.

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Solution provided by:
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
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