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

The Answer is 12.100

Step-by-step 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