Question
Disk City, Inc., is a retailer for digital video disks. The projected net income for the current year is $1,440,000 based on a sales volume
Disk City, Inc., is a retailer for digital video disks. The projected net income for the current year is $1,440,000 based on a sales volume of 200,000 video disks. Disk City has been selling the disks for $23 each. The variable costs consist of the $11 unit purchase price of the disks and a handling cost of $2 per disk. Disk Citys annual fixed costs are $560,000. Management is planning for the coming year, when it expects that the unit purchase price of the video disks will increase 20 percent. (Ignore income taxes.)
In order to cover a 20 percent increase in the disks purchase price for the coming year and still maintain the current contribution-margin ratio, what selling price per disk must Disk City establish for the coming year? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
1.Break-even point
2.Net income
3.Volume of sales
4.Selling price per disk
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