Answer:
The company will need to sale 3,883 units to maintain its current operating income of 400,000
Explanation:
We will calculate the point at which the company mantains his current income in units at the new scenario:
<u>Where:</u>
625 - 190 = 435 each units contributes this amount to afford the fixed cost and make a gain.
Current income: contribution x units sold - fixed cost
(590-190) x 4,000 - 1,200,000 = 400,000
(1,200,000 + 89,000 + 400,000) / 435 = 3,882.75862 = 3,883 units
The company will need to sale 3,883 units to maintain its current operating income of 400,000