Herrell Corporation manufactures numerous products, one of which is called Delta11. The company has provided the following data about this product:

-Assume that the total traceable fixed expense does not change.If Herrell increases the price of Delta11 to $30.45,what percentage change in unit sales would provide the same net operating income as is currently being earned at a price of $29.00? (Your answer should be rounded to the nearest 0.1%.)
A) -10.0%
B) -8.2%
C) -12.7%
D) -19.8%

Question

Herrell Corporation manufactures numerous products, one of which is called Delta11. The company has provided the following data about this product:
 
-Assume that the total traceable fixed expense does not change.If Herrell increases the price of Delta11 to $30.45,what percentage change in unit sales would provide the same net operating income as is currently being earned at a price of $29.00? (Your answer should be rounded to the nearest 0.1%.)
A) -10.0% 
B) -8.2% 
C) -12.7% 
D) -19.8%

Quizplus · Accepted Answer

Profit = (P - V) × Q - Fixed expenses
$90,000 = ($30.45 per unit - $19.00 per unit) × Q - $1,010,000
$1,100,000 = ($30.45 per unit - $19.00 per unit) × Q
$1,100,000 = ($11.45 per unit) × Q
Q = $1,100,000 ÷ $11.45 per unit = 96,070 units (rounded up)
Percentage change in unit sales = (96,070 units − 110,000 units) ÷ 110,000 units = -12.7% (rounded)

Herrell Corporation Manufactures Numerous Products, One of Which Is Called