Kopec Corporation manufactures numerous products, one of which is called Delta42. 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 Delta42 would Kopec need to sell at a price of $60.50 to earn the same net operating income that it currently earns at a price of $55.00? (Round your answer up to the nearest whole number.)
A) 122,642
B) 154,762
C) 134,717
D) 144,500

Question

Kopec Corporation manufactures numerous products, one of which is called Delta42. 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 Delta42 would Kopec need to sell at a price of $60.50 to earn the same net operating income that it currently earns at a price of $55.00? (Round your answer up to the nearest whole number.)
A) 122,642 
B) 154,762 
C) 134,717 
D) 144,500

Quizplus · Accepted Answer

First, we need to calculate the current contribution margin per unit:
$55.00 - $38.75 - $1.00 - $4.10 = $11.15 
Next, we need to calculate the current break-even point in units:
Fixed expenses / Contribution margin per unit = $2,860,000 / $11.15 = 256,981 units
To maintain the same net operating income at a selling price of $60.50, we can use the formula:
New contribution margin per unit = Current contribution margin per unit
$60.50 - $38.75 - $1.00 - $4.10 = $16.65
New break-even point in units = Fixed expense / New contribution margin per unit
$2,860,000 / $16.65 = 171,571 units
Therefore, Kopec would need to sell 171,571 - 256,981 = 85,410 additional units of Delta42 to earn the same net operating income at a selling price of $60.50. 
Total units sold at a price of $60.50 = 256,981 + 85,410 = 342,391 units
Rounding up to the nearest whole number, the answer is 134,717 (choice C).

Kopec Corporation Manufactures Numerous Products, One of Which Is Called