Chruch Corporation manufactures numerous products, one of which is called Tau42. The company has provided the following data about this product:

-Assume that the total traceable fixed expense does not change.If Chruch decreases the price of Tau42 to $60.16,what percentage change in unit sales would provide the same net operating income as is currently being earned at a price of $64.00? (Your answer should be rounded to the nearest 0.1%.)
A) 15.5%
B) 23.8%
C) -6.7%
D) -10.0%

Question

Chruch Corporation manufactures numerous products, one of which is called Tau42. The company has provided the following data about this product:
 
-Assume that the total traceable fixed expense does not change.If Chruch decreases the price of Tau42 to $60.16,what percentage change in unit sales would provide the same net operating income as is currently being earned at a price of $64.00? (Your answer should be rounded to the nearest 0.1%.)
A) 15.5% 
B) 23.8% 
C) -6.7% 
D) -10.0%

Quizplus · Accepted Answer

Profit = (P - V) × Q - Fixed expenses
$80,000 = ($60.16 per unit - $44.00 per unit) × Q - $1,120,000
$1,200,000 = ($60.16 per unit - $44.00 per unit) × Q
$1,200,000 = ($16.16 per unit) × Q
Q = $1,200,000 ÷ $16.16 per unit = 74,258 units (rounded up)
Percentage change in unit sales = (74,258 units − 60,000 units) ÷ 60,000 units = 23.8% (rounded)

Chruch Corporation Manufactures Numerous Products, One of Which Is Called