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33. Bonita Industries reported the following results from the sale of 5000 hammers in May: sales...

33. Bonita Industries reported the following results from the sale of 5000 hammers in May: sales $200000, variable costs $120000, fixed costs $60000, and net income $20000. Assume that Bonita increases the selling price of hammers by 10% on June 1. How many hammers will have to be sold in June to maintain the same level of net income?

a) 4000

b) 4255

c) 4545

d) 5000

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Answer #1
Correct Answer : Option a) 4000
Working Notes :
Sales 200000
Selling Price 200000/5000 40
New Selling Price (200000*1.10)/5000 44
Variable Cost 120000/5000 24
Target Units (fixed cost + profit) /contribution margin
= (60000+20000)/20
= 80000/20
= 4000 units
Contribution margin = selling price per unit - variable cost per unit
= 44-24
= 20
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