Business

Brent

8 September, 02:41

Kearney Company, operating at full capacity, sold 400,000 units at a price of $246.60 per unit during 20Y5. Its income statement for 20Y5 is as follows:

Sales $ 98,640,000

Cost of goods sold (44,500,000)

Gross profit $ 54,140,000

Expenses:

Selling expenses $8,000,000

Administrative expenses 3,000,000

Total expenses (11,000,000)

Income from operations $ 43,140,000

The division of costs between fixed and variable is as follows:

Fixed Variable

Cost of good sold 28% 72%

Selling expenses 25% 75%

Administrative expenses 80% 20%

Management is considering a plant expansion program that will permit an increase of $8,631,000 (35,000 units at $246.60) in yearly sales. The expansion will increase fixed costs by $3,600,000 but will not affect the relationship between sales and variable costs.

Determine for 20Y5 the total fixed costs and the total variable costs.