A total of 30,000 units were sold last year.The contribution margin per unit was $2,and fixed expenses totalled $20,000 for the year.This year fixed expenses are expected to increase to $26,000,but the contribution margin per unit will remain unchanged at $2.How many units must be sold this year to earn the same net income as was earned last year?

Question

Quizplus · Accepted Answer

To earn the same net income as last year, we need to calculate the total contribution margin required to cover the increase in fixed expenses.

Total contribution margin required = Fixed expenses this year - Fixed expenses last year

Total contribution margin required = $26,000 - $20,000 = $6,000

Contribution margin per unit = $2

Now we can use the formula to calculate the number of units required to earn the same net income:

Number of units = (Total contribution margin required) / (Contribution margin per unit)

Number of units = $6,000 / $2 = 3,000 units

Therefore, the company needs to sell an additional 3,000 units this year to earn the same net income as last year.

Total units required this year = Total units sold last year + Additional units required = 30,000 units + 3,000 units = 33,000 units.

Hence, the correct answer is D) 33,000 units.

A Total of 30,000 Units Were Sold Last Year