Naylor Company had $150,600 of net income in 2013 when the selling price per uni

Question

Naylor Company had $150,600 of net income in 2013 when the selling price per unit was $160, the variable costs per unit were $100, and the fixed costs were $574,200. Management expects per unit data and total fixed costs to remain the same in 2014. The president of Naylor Company is under pressure from stockholders to increase net income by $60,600 in 2014.

(a)

Show Solution

Show Answer

Link to Text

(c)

$

Naylor Company had $150,600 of net income in 2013 when the selling price per unit was $160, the variable costs per unit were $100, and the fixed costs were $574,200. Management expects per unit data and total fixed costs to remain the same in 2014. The president of Naylor Company is under pressure from stockholders to increase net income by $60,600 in 2014.

Explanation / Answer

a)

Desired Income in 2014=150,600

Fixed cost=$574,200

Contribution =SP-VC=$160-$100=$60

so Number of units to be sold=(Desired profit+Fixed cost)/Contribution per unit=($150,600+$574,200)/60

=12,080

b)

Desired Income in 2014=150,600+60,600=$211,200

Fixed cost=$574,200

Contribution =SP-VC=$160-$100=$60

so Number of units to be sold=(Desired profit+Fixed cost)/Contribution per unit=($211,200+$574,200)/60

=13,090

c.

number of units to be sold in 2014=12,080

so Seling Price=X

so $211,200=X*12,080-12,080*$60-$574,200

X*12,080=$211,200+$724,800+$574,200

X*12,080=$1,510,200

X=$1,510,200/12,080=$125.017

Related Questions

Navigate

• Browse (All)
• Browse N
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.