Naylor Company had $210,000 of net income in 2019 when the selling price per unit was $150, the variable costs per unit were $90, and the fixed costs were $570,ooo. Management expects per unit data and total fixed costs to remain the same in 2020. The president of Naylor Company is under pressure from stockholders to increase net income by $52,000 in 2020.
Instructions
- Compute the number of units sold in 2019.
- Compute the number of units that would have to be sold in 2020 to reach the stock holders' desired profit level.
- Assume that Naylor Company sells the same number of units in 2020 as it did in 2019. What would the selling price have to be in order to reach the stockholders' desired profit level?
Solution
