Attal Corporation manufactures numerous products, one of which is called Epsilon05. The company has provided the following data about this product: Assume that the total traceable fixed expense does not change. If Attal increases the price of Epsilon05 to $75.60, what percentage change in unit sales would provide the same net operating income as is currently being earned at a price of $72.00? (Your answer should be rounded to the nearest 0.1%.)

Question

Attal Corporation manufactures numerous products, one of which is called Epsilon05. The company has provided the following data about this product:  Assume that the total traceable fixed expense does not change. If Attal increases the price of Epsilon05 to $75.60, what percentage change in unit sales would provide the same net operating income as is currently being earned at a price of $72.00? (Your answer should be rounded to the nearest 0.1%.)

Quizplus · Accepted Answer

Profit = (P − V) × Q − Fixed expenses
$240,000 = ($75.60 per unit − $43.00 per unit) × Q − $2,370,000
$2,610,000 = ($75.60 per unit − $43.00 per unit) × Q
$2,610,000 = ($32.60 per unit) × Q
Q = $2,610,000 ÷ $32.60 per unit = 80,062 units (rounded up)
Percentage change in unit sales = (80,062 units − 90,000 units) ÷ 90,000 units = −11.0% (rounded)

Attal Corporation Manufactures Numerous Products, One of Which Is Called