Question
10 Assume that a company manufactures numerous products, one of which is called Product A. The company has provided the following data regarding this
10 Assume that a company manufactures numerous products, one of which is called Product A. The company has provided the following data regarding this product: Unit sales (a) Selling price per unit Variable cost per unit Contribution margin per unit (b) Total contribution margin (a) (b) Traceable fixed expenses Net operating income 120,000 $ 20.00 12.00 $ 8.00 $ 960,000 928,000 $ 32,000 The company is considering increasing the price of Product A by 10%, from $20.00 to $22.00. The company estimates that this price hike will decrease unit sales by 15%, from 120,000 units to 102,000 units. How many units would the company need to sell at a price of $22.00 to earn the exact same profit that it currently earns at a price of $20.00?
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