# Armstrong Company, operating at full capacity, sold 80,000 units at a price of \$124 per unit during

BreakÂ­Even Sales Under Present and Proposed ConditionsArmstrong 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 between fixed costs and variable costs is 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. Total fixed costs: \$Total variable costs: \$2. Determine for 2012 (a) the unit variable cost and (b) the unit contribution margin.Unit variable cost: \$Unit contribution margin: \$3. Compute the breakÂ­even sales (units) for 2012. units4. Compute the breakÂ­even sales (units) under the proposed program.5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the \$1,100,000 of income from operations that was earned in 2012. 6. Determine the maximum income from operations possible with the expanded plant. \$7. If the proposal is accepted and sales remain at the 2012 level, what will the income or loss from operations be for 2013?