Chapter 21 Accounting

Ballywide Company, operating at full capacity, sold 92,240 units at a price of $140 per unit during 2013. Its income
statement for 2013 is as follows:      
Sales    12,913,600  
Cost of goods sold    5,000,000  
Gross profit    7,913,600  
Selling expenses  2,800,000    
Administrative expenses  1,720,000    
Total expenses    4,520,000  
Income from operations    3,393,600  
The division of costs between fixed and variable is as follows:  
  Fixed Variable  
Cost of Sales 45% 55%  
Selling expense 55% 45%  
Administrative expense 65% 35%









    a.  Determine for 2013 the total fixed costs and the total variable costs. b.  Determine for 2013 (1) the unit variable cost and (2) the unit contribution margin. c.  Compute the break‐even sales in units for 2013. d.  Compute the break‐even sales in units under the proposed program. f.  Determine the maximum income from operations possible with the expanded plant. h.  Based on the data given, would you recommend accepting the proposal? e.  Determine the amount of sales in units that would be necessary under the proposed program to realize the   $3,393,600 of income from operations that was earned in 2013. g.  If the proposal is accepted and sales remain at the 2013 level, what will the income or loss from operations be for  2014?                        
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