Question

POPUPA OO. Hustry SOCIOP Perp IVO, AICPA FN MBromont, AICPAP 129. Problem Solving, IMA: Quantitative Methods Hayduke Corporation reported the following results from the sale of 5,000 units in May: sales $300,000, variable costs $180,000, fixed costs $90,000, and net income $30,000. Assume that Hayduke increases the selling price by 5% on June 1. How many units will have to be sold in June to maintain the same level of net income? a. 4,444 b. 4,600 c. 4,750. d. 5,000

Answer 1

Correct answer--------------(a) 4,444

Working

	Current	After increase in sales price
Sales revenue	$ 300,000.00	$ 315,000.00
Variable costs	$ 180,000.00	$ 180,000.00
Contribution margin	$ 120,000.00	$ 135,000.00
Contribution margin ratio	40.00%	42.86%
Fixed cost Plus profit		$ 120,000.00
Sales revenue (120000/42.86%)		$ 280,000.00
Units sold (280000/63)		4,444