Refer to Socks Unlimited in E7-21A. If the company can decrease its variable costs to $1.00 per package by increasing its fixed costs to $100,000, how many packages will it have to sell to generate $22,000 of operating income? Is this more or less than before? Why?
In E7-21A
Socks Unlimited produces sports socks. The company has fixed expenses of $85,000 and variable expenses of $1.20 per package. Each package sells for $2.00.