Warbler Gift's reported the following information for the sales of their single product:
Warbler's salesmen have proposed to decrease the selling price by 50 cents per unit.How many units will need to be sold for Warbler to earn at least the same net operating income?

Question

Warbler Gift's reported the following information for the sales of their single product:
 Warbler's salesmen have proposed to decrease the selling price by 50 cents per unit.How many units will need to be sold for Warbler to earn at least the same net operating income?

Quizplus · Accepted Answer

Profit = (P - V) × Q - Fixed expenses
$20,000 = ($9.50 per unit - $6.00 per unit) × Q - $100,000
($9.50 per unit - $6.00 per unit) × Q = $120,000
$3.50 per unit × Q = $120,000
Q = $120,000 ÷ $3.50 per unit
Q = 34,286 units

Warbler Gift's Reported the Following Information for the Sales of Their