produces sport socks. The company has fixed expenses of

$ 110 comma 000$110,000

and variable expenses of

$ 1.10$1.10

per package. Each package sells for

$ 2.20$2.20.

The number of packages

Ten ToesTen Toes

needed to sell to earn

aa

$ 27 comma 000$27,000

operating income was

124 comma 546124,546

packages left parenthesis rounded right parenthesis .packages (rounded).

If

Ten ToesTen Toes

can decrease its variable costs to

$ 0.90$0.90

per package by increasing its fixed costs to

$ 125 comma 000$125,000,

how many packages will it have to sell to generate

$ 27 comma 000$27,000

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.

(

Fixed expenses

+

Operating income

) /

Contribution margin per unit

=

Sales in units

(Round your answer up to the nearest whole unit.)

Ten Toes will have to sell

packages to generate $27,000 of operating income.