Newham Textiles manufactures and sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for £7.50 each, and the variable expense was £2.25 per unit.
The company needed to sell 20,000 shirts to break even. The net operating income last year was £8,400. Donnelly's expectations for the coming year include the following:
* The selling price of the T-shirts will be £9.00.
* Variable expenses will increase by one third.
* Fixed expenses will increase by 10 selling price
-Sales for the coming year are expected to exceed last year's by 1,000 units. If this occurs, Newham's sales volume in the coming year will be:

Question

Newham Textiles manufactures and sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for £7.50 each, and the variable expense was £2.25 per unit.
The company needed to sell 20,000 shirts to break even. The net operating income last year was £8,400. Donnelly's expectations for the coming year include the following:
* The selling price of the T-shirts will be £9.00.
* Variable expenses will increase by one third.
* Fixed expenses will increase by 10 selling price 
-Sales for the coming year are expected to exceed last year's by 1,000 units. If this occurs, Newham's sales volume in the coming year will be:

Quizplus · Accepted Answer

The correct answer is A because the sales volume in the coming year will be 22,600 units. This is calculated by taking the break-even point of 20,000 units and adding the expected increase in sales of 1,000 units.

Newham Textiles Manufactures and Sells T-Shirts Imprinted with College Names