Hoder Corporation manufactures numerous products, one of which is called Gamma45. The company has provided the following data about this product: Assume that the total traceable fixed expense does not change. How many units of product Gamma45 would Hoder need to sell at a price of $38.95 to earn the same net operating income that it currently earns at a price of $41.00? (Round your answer up to the nearest whole number.)

Question

Hoder Corporation manufactures numerous products, one of which is called Gamma45. The company has provided the following data about this product:  Assume that the total traceable fixed expense does not change. How many units of product Gamma45 would Hoder need to sell at a price of $38.95 to earn the same net operating income that it currently earns at a price of $41.00? (Round your answer up to the nearest whole number.)

Quizplus · Accepted Answer

Profit = (P − V) × Q − Fixed expenses
$40,000 = ($38.95 per unit − $29.00 per unit) × Q − $680,000
$720,000 = ($38.95 per unit − $29.00 per unit) × Q
$720,000 = ($9.95 per unit) × Q
Q = $720,000 ÷ $9.95 per unit = 72,362 units (rounded up)

Hoder Corporation Manufactures Numerous Products, One of Which Is Called