Naylor Company had $151,400 of net income in 2016 when the selling price per uni

Question

Naylor Company had $151,400 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 $574,800. 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 $65,700 in 2017. Your answer is correct. Compute the number of units sold in 2016. (Round answer to 0 decimal places, e.g. 1,225.,) 2103 units Your answer is correct. Compute the number of units that would have to be sold in 2017 to reach the stockholders' desired profit level. 3198 units x Your answer is incorrect. Try again. Assume that Naylor Company sells the same number of units in 2017 as it did in 2016. What would the selling price have to be in order to reach the stockholders' desired profit level? (Round answer to 2 decimal places, e.g. 12.25.) New selling price 167.77 Question Attempts: 4 of 15 used

Explanation / Answer

Since first two answers are correct, I am answering the third one:

Number of Units sold in year 2016 = 12103

Desired profit level = 151400+65700 => $ 217100

Variable Cost = 92 per unit

Fixed Cost = 574800

We need to find Sales price to maintain that level of profit, therefore, let sales price = 'X'

Total Sales less Total Variable Cost less Total Fixed Cost = Desired Profit

12103*X-12103*92-574800= $ 217100

12103X-1113476-574800=217100

12103X=217100+1113476-574800

12103X=1905374

X=1905374/12103

X=157.43 (Answer)

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