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EXERCISE 3 ord Company had van net loss of $150,000 in 2019 when the selling price per unit was $20, the costs per unit were
EXERCISE 3 ord Company had van net loss of $150,000 in 2019 when the selling price per unit was $20, the costs per unit were $14, and the fixed costs were $600,000. Management expects per unit data and total fixed costs to be the same in 2020. Management has set a goal of earning net income of $75,000 in 2020. Instructions (6) Compute the units sold in 2019. (b) Compute the number of units that would have to be sold in 2020 to reach management's desired net income level (C) Assume that Ransford Company sells the same number of units in 2020 as it did in 2019. What would the selling price have to be in order to reach the target net income? Use the mathematical equation. Solution 3 (a) Units sold in 2019 units (b) Units sold in 2020 units (c) Selling price needed in 2020 = Selling price needed in 2020 = - EXERCISE 4 The income statement for Hyland Company for 2019 appears below Income Statement for the Year Ended December 31, 2019 HYLAND COMPANY Sales revenue (40,000 units) Variable expenses... Contribution margin Fixed expenses Net income (loss). Instructions $1.000.000 700.000 300,000 145.000 $ 50 Answer the following independent questions and show computations using the contribution margin technique to support your answers 1. What was the company's break even point in sales dollars in 2019 2 How many additional units would the company have to sell in 2020 (compared to 2019) in order to earn net income of $45,000P 3. If the company is able to reduce variable costs by $4.50 per unit in 2020 and other costs and unit revenues remain unchanged, how many units will the company have to sell in order to earn a net income of $45,000 Solution 4 Total sales needed total units to be sold Note: Required sales in units can be obtained directly by dividing fixed costs plus profit by contribution margin per unit: 3. 2019 Variable cost per unit Variable cost reduction = 2020 Variable cost per unit Expected contribution margin $ units
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