Ten Toes produces sport socks. The company has fixed expenses of $90,000 and variable expenses of $0.90 per package. Each package sells for $1.80. The number of packages Ten Toes needed to sell to earn a $23,000 operating income was 125,556 packages left parenthesis rounded right parenthesis .packages (rounded). If Ten Toes can decrease its variable costs to $0.80 per package by increasing its fixed costs to $105,000, how many packages will it have to sell to generate $23,000 of operating income? Is this more or less than before? Why?

Ten Toes will have to sell

128,000

packages to generate $23,000 of operating income.

Is this more or less than before? Why?

Ten Toes would have to sell

packages of socks to earn $23,000 of operating income.

The increase in fixed costs

completely offset by the

in variable costs at the prior

target profit volume of sales. Therefore, Ten Toes will need to sell

units in order to achieve its

target profit level.