Naylor Company had $154,200 of net income in 2013 when the selling price per uni

Question

Naylor Company had $154,200 of net income in 2013 when the selling price per unit was $163, the variable costs per unit were $103, and the fixed costs were $573,600. Management expects per unit data and total fixed costs to remain the same in 2014. The president of Naylor Company is under pressure from stockholders to increase net income by $61,200 in 2014.

(a)

Compute the number of units sold in 2013.

Naylor Company had $154,200 of net income in 2013 when the selling price per unit was $163, the variable costs per unit were $103, and the fixed costs were $573,600. Management expects per unit data and total fixed costs to remain the same in 2014. The president of Naylor Company is under pressure from stockholders to increase net income by $61,200 in 2014.

Explanation / Answer

Selling price per unit = 163

Variable cost per unit = 103

Contribution per unit = Selling Price per unit - Variable cost per unit

= 163-103 i.e 60

Number of units sold in 2013

Desired Sales = Fixed Cost + Profit / Contribution per unit

= (573600+154200)/60

= 12130 units

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