Break-Even Sales Under Present and Proposed Conditions 30090

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.