Warbler Gift\'s reported the following information for the sales of their single

Question

Warbler Gift's reported the following information for the sales of their single product Per Unit 516 Sales Variable expenser Contribution margin Fixed expenses Net operating incone $ 300,000 128,880 28,900 Warbler's salesmen have proposed to decrease the selling price by 50 cents per unt. How many units will need to be sold for Warbler to earm at least the same net operating income O 5,715 units O 36,000 units O 34,286 units O 28,572 units Moving to another question will save this response Type here to search

Explanation / Answer

Target contribution margin=Fixed costs+Net operating income

=(100,000+20,000)=$120,000

New selling price=(10-0.5)=$9.5

New contribution margin=Selling price-Variable costs

=(9.5-6)=$3.5

Hence units to be sold=(120,000/3.5)=34286 units(Approx).

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