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A spin-off firm of Cups Coffee Inc. named Cups Tea Limited currently has a single product-bottled, brewed tea that it sold last fiscal year for
A spin-off firm of Cups Coffee Inc. named Cups Tea Limited currently has a single product-bottled, brewed tea that it sold last fiscal year for $2.40 per unit. The variable costs per bottled unit in that same fiscal year were $1.60. The manufacturing facility had annual fixed costs of $1,864,000. This year, the company is increasing its sales price per bottle by 5%. Management believes that variable costs will only increase by 2.5% but that fixed costs will increase by 3%. If all three expected changes occur, the sales (in units) needed to achieve a target profit of $200,000 is: a) 2,580,000 units b) 2,409,000 units c) 2,330,000 units d) 2,181,728 units
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