Question

I'd like to receive a detailed breakdown on problems 2 and 3 please.

Question 2 4.5 pts Pure Water Products produces a water filter that attaches to the faucet and cleans all water that passes through the faucet. During 2019, 38,000 units of the water filter were sold to customers. Information related to the water filter product appears below: Contribution margin.. Variable costs ...... Fixed costs (in total) ....... $28.30 per unit $43.20 per unit $833,220 Calculate the number of needed to sell in 2019 Water Products equal to 18% of sales. Question Pure Water Products produces a water filter that attaches to the faucet and cleans all water that passes through the faucet. During 2019, 38,000 units of the water filter were sold to customers. Information related to the water filter product appears below: Contribution margin .. Variable costs ................... Fixed costs (in total) $28.30 per unit $43.20 per unit $833, 220 For 2020, Pure Water is considering buying new production equipment. The new equipment will increase fixed costs by $33,085 per year and will decrease the variable cost of the water filter by $2.75 per unit. Assume the new production equipment is purchased. Calculate the number of units of the water filter that Pure Water Products needs to sell in 2020 in order to earn the same net income that was earned in 2019.

Answer 1

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Answer 2
	Amount $	Note
Contribution margin	28.30	A
Variable costs	43.20	B
Sell price per unit	71.50	C=A+B
Let number of units sold in 2019 be X.
Sales value in 2019	71.50X	D
Net Income required	18%	E
Net Income $	12.87X	F=D*E
Total Contribution $	28.30X	G=A*X
Formula of net income= Total Contribution- Total Fixed costs
Or,
12.87X =	28.30X- 833,220
28.30X- 12.87X =	833,220.00
15.43X =	833,220.00
X=	833220/15.43
X=	54,000.00	H
So total units to be sold to get net income of 18% on sales is 54,000.
Proof:
Sells Units	54,000.00	See H
Sell price per unit	71.50	See C
Sale value	3,861,000.00	I= H*C
Contribution margin	28.30	See A
Total Contribution $	1,528,200.00	K=H*A
Less: Total Fixed costs	833,220.00	L
Net income	694,980.00	M=K-L
Net income % of sales	18%	N=M/I
Answer 3
Calculation of net income earned in 2019:
Sells Units	38,000.00	O
Contribution margin	28.30	P
Total Contribution $	1,075,400.00	Q=O*P
Less: Total Fixed costs	833,220.00	R
Net income	242,180.00	S=Q-R
If Variable costs decrease by $ 2.75 it means contribution margin will increase by $ 2.75.
Revised Contribution margin	31.05	T= S+$ 2.75
Revised Fixed costs
Old Fixed costs	833,220.00	See R
Increase by	33,085.00	U
Revised Fixed costs	866,305.00	V=U+R
Add: Net income for 2019	242,180.00	See S
Target Contribution	1,108,485.00	W=V+S
Revised Contribution margin	31.05	See T
Number of units to be sold	35,700.00	Y=W/T
So total units to be sold to get same net income as 2019 is 35,700.