Bondi Ltd had a loss of $100,000 in 2017 when the selling price per unit was $20, the variable costs per unit were $12, and the fixed costs were $400,000. Management expects per unit data and total fixed costs to be the same in 2018. Management has set a goal of earning a target profit of $100,000 in 2018.
Instructions:
(a) Compute the units sold in 2017.
(b) Compute the number of units that would have to be sold in 2018 to reach management's desired profit level.
(c) Assume that Bondi Ltd sells the same number of units in 2018 as they did in 2017. What would the selling price have to be in order to reach the target profit?

Question

Bondi Ltd had a loss of $100,000 in 2017 when the selling price per unit was $20, the variable costs per unit were $12, and the fixed costs were $400,000. Management expects per unit data and total fixed costs to be the same in 2018. Management has set a goal of earning a target profit of $100,000 in 2018.
Instructions: 
(a) Compute the units sold in 2017.
(b) Compute the number of units that would have to be sold in 2018 to reach management's desired profit level.
(c) Assume that Bondi Ltd sells the same number of units in 2018 as they did in 2017. What would the selling price have to be in order to reach the target profit?

Quizplus · Accepted Answer

The Answer of Bondi Ltd had a loss of $100,000 in 2017 when the selling price per unit was $20, the variable costs per unit were $12, and the fixed costs were $400,000. Management expects per unit data and total fixed costs to be the same in 2018. Management has set a goal of earning a target profit of $100,000 in 2018.
Instructions: 
(a) Compute the units sold in 2017.
(b) Compute the number of units that would have to be sold in 2018 to reach management's desired profit level.
(c) Assume that Bondi Ltd sells the same number of units in 2018 as they did in 2017. What would the selling price have to be in order to reach the target profit?

Bondi Ltd Had a Loss of $100,000 in 2017 When