Answer:
Number of units= 4,000 units
Explanation:
Giving the following information:
Sales $200,000
variable costs $120,000
fixed costs $60,000
net income $20,000.
We have to maintain a net income of $20,000.
First, we will calculate the selling price per unit and the unitary variable cost:
Selling price= 200,000/5,000= $40 per unit
Variable cost per unit= 120,000/5,000= $24 per unit
New selling price:
Selling price= $44
Contribution margin per unit= 44 - 24= $20
Now, we have to find the total contribution margin required:
Contribution margin required= net operating income + fixed costs
Contribution margin required= 20,000 + 60,000= 80,000
Number of units= total contribution margin/ unitary contribution margin
Number of units= 80,000/20= 4,000 units
