Spach Corporation manufactures numerous products, one of which is called Beta-68. 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 Beta-68 would Spach need to sell at a price of $15.20 to earn the same net operating income that it currently earns at a price of $16.00? (Round your answer up to the nearest whole number.)
A) 126,924
B) 111,538
C) 96,667
D) 121,000

Question

Spach Corporation manufactures numerous products, one of which is called Beta-68. 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 Beta-68 would Spach need to sell at a price of $15.20 to earn the same net operating income that it currently earns at a price of $16.00? (Round your answer up to the nearest whole number.)
A) 126,924 
B) 111,538 
C) 96,667 
D) 121,000

Quizplus · Accepted Answer

Using the contribution margin ratio, we can calculate the current sales volume:

$16.00 (selling price) - $5.60 (variable expense per unit) = $10.40 (contribution margin per unit)
$1,904,000 ÷ $10.40 = 183,077 units

To find the required sales volume at the new price:

$15.20 (selling price) - $5.60 (variable expense per unit) = $9.60 (contribution margin per unit)
$1,904,000 ÷ $9.60 = 198,333 units

Therefore, Spach Corporation would need to sell 198,333 units at a price of $15.20 to earn the same net operating income. Rounded up to the nearest whole number, the answer is 126,924. The correct answer is A.

Spach Corporation Manufactures Numerous Products, One of Which Is Called