Naylor company has $210,000 of net income in 2013 when the selling price per units was $150, the variable costs per unit were $90, and the fixed costs were $570,000. Management expects per unit data and total fixed costs to remain the same in 2013. The president of Naylor Ocmpany is under pressure from stockholders to increase net income by $52,000 in 2014.
Instructions
a) COmpute the number of units sold in 2013.
b) compute the number of units that would have to be sold in 2014 to reach the stockholders' desired profit level.
c) Assume that naylor company sells the same number of units in 2014 as it did in 2013. What would the selling price have to be in order to reacch the stockholders' desired profit level?
Correct answers:
a) 13,000
b) 13,867 (rounded)
c) $154