Darby Company, operating at full capacity, sold 122,200 units at a price of $102 per unit during the current year. Its income statement is as follows: Sales $12,464,400 Cost of goods sold 4,420,000...

Darby Company, operating at full capacity, sold 122,200 units at a price of $102 per unit during the current year. Its income statement is as follows:

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

Management is considering a plant expansion program for the following year that will permit an increase of $1,122,000 in yearly sales. The expansion will increase fixed costs by $149,600, but will not affect the relationship between sales and variable costs.

Extracted text: 7. If the proposal is accepted and sales remain at the current level, what will the income or loss from operations be for the following year? 8. Based on the data given, would you recommend accepting the proposal? a. In favor of the proposal because of the reduction in break-even point. b. In favor of the proposal because of the possibility of increasing income from operations. c. In favor of the proposal because of the increase in break-even point. d. Reject the proposal because if future sales remain at the current level, the income from operations will increase. e. Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales. Choose the correct answer.