3-19 Influence of Relevant Range on Cost Behavior The Charne Company's cost behavior is as follows: PRODUCTION RANGE IN UNITS FIXED COSTS 0- 20,000 $160,000 20,001-65,000 190,000 65,001-90,000 210,000 250,000 90,001-100,000 At an activity of 70,000 units per year, variable costs total $280,000. Full capacity is 100,000 units per year. (Each case given below is independent of any other and should be consid- ered individually.) 1. Production is now set at 50,000 units per year with a sales price of $7.50 per unit. What is the minimum number of additional units needed to be sold in an unrelated market at $5.50 per unit to show a total net profit of $3,000 per year? 2. Production is now set at 60,000 units per year. By how much may sales- promotion costs be increased to bring production up to 80,000 units and still earn a net profit of 5 percent of total sales if the selling price is held at $7.50?

3. If net profit is currently $10,000, with fixed costs at $160,000, and a 2 percent increase in price will leave units sold unchanged but increase profits by $5,000, what is the present volume in units?