Hammen Corporation manufactures numerous products,one of which is called Omicron43.The company has provided the following data about this product:
Assume that the total traceable fixed expense does not change.If Hammen decreases the price of Omicron43 to $16.20,what percentage change in unit sales would provide the same net operating income as is currently being earned at a price of $18.00? (Your answer should be rounded to the nearest 0.1%.)
A) 11.8%
B) -20.0%
C) 29.0%
D) -13.3%

Question

Hammen Corporation manufactures numerous products,one of which is called Omicron43.The company has provided the following data about this product:
 Assume that the total traceable fixed expense does not change.If Hammen decreases the price of Omicron43 to $16.20,what percentage change in unit sales would provide the same net operating income as is currently being earned at a price of $18.00? (Your answer should be rounded to the nearest 0.1%.)
A) 11.8% 
B) -20.0% 
C) 29.0% 
D) -13.3%

Quizplus · Accepted Answer

Profit at the current price:
 11ea7761_1639_a190_81a5_8325f15f7946_TB2580_00 Profit = (P - V) × Q - Fixed expenses
$160,000 = ($16.20 per unit - $10.00 per unit) × Q - $1,040,000
$1,200,000 = ($16.20 per unit - $10.00 per unit) × Q
$1,200,000 = ($6.20 per unit) × Q
Q = $1,200,000 ÷ $6.20 per unit = 193,549 units (rounded up)
Percentage change in unit sales = (193,549 units − 150,000 units) ÷ 150,000 units = 29.0% (rounded)

Hammen Corporation Manufactures Numerous Products,one of Which Is Called Omicron43