Pittsboro Corporation produces and sells a single product. Data for that product

Question

Pittsboro Corporation produces and sells a single product. Data for that product are Sales price per unit Variable cost per unit Fixed expenses for the month Currently selling $500 $220 $1,000,000 4,000 units Management is discussing increasing the price to $525 to cover an increase in fixed expenses of $80,000. Management believes they might lose 2% of sales per month. How many units per month would the company have to sell to maintain its current level of operating income? Round up to the nearest whole unit. OA. 4,000 units B. 3,935 units OC. 3,572 units OD, 5,269 units

Explanation / Answer

Current operating income = 4000*(500-220)-1000000= 120000 Unit sales required = (120000+1000000+80000)/(525-220)= 3935 Option B is correct

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