A company manufactures a product that currently sells for $30. The fixed costs are $100,000 per year and the variable costs are $20. The capacity of the production facility is 50,000 units per year.

a. How many units must be produced to attain a net income of $80,000 per year?

b. If sales dropped to 50% of the capacity and the selling price reduced by $3 per unit, what would be the net income?

AppendixLO1