Question

Crane Company had $94,800 of net income in 2019 when the selling price per unit was $152, the variable costs per unit were $97, and the fixed costs were $570,700. Management expects per unit data and total fixed costs to remain the same in 2020. The president of Crane Company is under pressure from stockholders to increase net income by $60,500 in 2020. Compute the number of units sold in 2019.

Answer 1

Answer:

The Answer is 12.100

Explanation:

Firstly get the variable margin = (revenue – variable cost) since we don’t have the revenue but we know that there was just one fixed expense we can get the variable margin in this way

Total Variable Margin = Net income + Fixed cost = $94.800+$570.700= 665.500

Then get the variable margin per unit = Price of sale per unit  – cost per unit = 152-97 = $55

The units sold can be calculated in this way = Total Variable Margin / Variable Margin per unit=  665.500/55 = 12.100

                                               Units   price   Total  

Revenue                                     12,100.00   152.00   1,839,200.00  

Variable Cost                             12,100.00   97.00   (1,173,700.00)

Fixed Cost                                                    (570,700.00)

Net income                                                        94,800.00