Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $188 per unit during the current year.

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Portmann Company, operating at full capacity, sold 1,000,000
units at a price of $188 per unit during the current year. Its
income statement is as follows:
The division of costs
between variable and fixed is as follows:
Management is considering a plant expansion program for the
following year that will permit an increase of $9,400,000 in yearly
sales. The expansion will increase fixed costs by $4,500,000 but
will not affect the relationship between sales and variable
costs.
Required:
1. Determine the total variable costs and
the total fixed costs for the current year.
2. Determine (a) the unit variable cost
and (b) the unit contribution margin for the current
year.
3. Compute the break-even sales (units)
for the current year.
fill in the blank 5 units
4. Compute the break-even sales (units)
under the proposed program for the following year.
fill in the blank 6 units
5. Determine the amount of sales (units)
that would be necessary under the proposed program to realize the
$58,700,000 of operating income that was earned in the current
year.
fill in the blank 7 units
6. Determine the maximum operating income
possible with the expanded plant.
$fill in the blank 8
IncomeLoss
8. Based on the data given, would you
recommend accepting the proposal?
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