Hang Ten produces sports socks. The company has fixed expenses of $$110,000$ and variable expenses of $$1\mathrm{.}10$ per package. Each package sells for $$2\mathrm{.}20.$ The number of packages Hang Ten

needed to sell to earn a $$23,000$ operating income was $120,910$ packages $($rounded$).$ If Hang Ten can decrease its variable costs to $$0\mathrm{.}90$ per package by increasing its fixed costs to $$125,000,$ how

many packages will it have to sell to generate $$23,000$ of operating income? Is this more or less than before? Why?

Begin by identifying the formula to compute the sales in units at various levels of operating income using the contribution margin approach.