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.
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