Question

Naylor Company had $151,600 of net income in 2016 when the selling price per unit was $152, the variable costs per unit were $92, and the fixed costs were $574,500. Management expects per unit data and total fixed costs to remain the same in 2017. The president of Naylor Company is under pressure from stockholders to increase net income by $62,000 in 2017. Collapse question part (a) Correct answer. Your answer is correct. Compute the number of units sold in 2016. (Round answer to 0 decimal places, e.g. 1,225.) Entry field with correct answer 12102 units Click if you would like to Show Work for this question: Open Show Work SHOW SOLUTION SHOW ANSWER LINK TO TEXT LINK TO TEXT Attempts: 1 of 5 used Collapse question part (b) Incorrect answer. Your answer is incorrect. Try again. Compute the number of units that would have to be sold in 2017 to reach the stockholders’ desired profit level. Entry field with incorrect answer 13122 units Click if you would like to Show Work for this question: Open Show Work

Answer 1

Req a:
Contribution margin per unit:
Selling price			152
Less: Variable cost			92
Contribution margin per unit:			60
Total contribution
Fixed cost			574500
Add: Net income			151600
Total contribution			726100
Divide: Contribution per unit			60
Number of units sold in 2016			12102
Req b:
Contribution margin per unit:
Selling price			152
Less: Variable cost			92
Contribution margin per unit:			60
Total Desired contribution
Fixed cost			574500
Add: Desired Net income			213600
Total contribution			788100
Divide: Contribution per unit			60
Number of units to be sold in 2017			13135