Answer:
1,118 units.
Explanation:
The computation of number of units to be sold is shown below:-
For the Year 2016
Number of Units Sold = 1,000 units
Unit selling price = $500 per unit
Total Sales = $500 × 1,000 = $500,000
Variable Costs = $300 × 1,000
= $300,000
Contribution = $500,000 - $300,000
= $200,000
Fixed Costs = $160,000
Net Income = $200,000 - $160,000
= $40,000
For the Year 2017
Unit Selling Price = $500 per unit
Unit Variable Cost = $300 × 1.10
= $330 per unit
Contribution per unit = $500 - $330 = $170 per unit
Fixed Cost = $160,000 - $10,000 = $150,000
Now, to maintain the same income of $ 40,000 the Company have a total contribution
$150,000 + $40,000
= $190,000
Number of units to be sold = Total contribution ÷ Contribution per unit
= $190,000 ÷ $170
= 1,117.64
or
1,118 units.
