Ginseng Corporation reported the following results from the sale of 10,000 units in July: sales $600,000, variable costs $360,000, fixed costs $80,000, and net income $41,500. Assume that Ginseng expects to increase the selling price by 5% on August 1. How many units will have to be sold by Ginseng in July to maintain the same level of net income?
A) 4,200
B) 4,500
C) 4,750
D) 5,000

Question

Quizplus · Accepted Answer

(Fixed costs + Target Net income) / (Adj. Selling price per unit - variable cost per unit) = Units to be sold for desired net income = ($80,000 + 41,500) / (($600,000 /10,000) x 1.05) - ($360,000 /10,000)) = 4,500

Ginseng Corporation Reported the Following Results from the Sale of 10,000