Pascal Corporation manufactures numerous products, one of which is called Gamma66. The company has provided the following data about this product:

-Assume that the total traceable fixed expense does not change.If Pascal decreases the price of Gamma66 to $48.96,what percentage change in unit sales would provide the same net operating income as is currently being earned at a price of $51.00? (Your answer should be rounded to the nearest 0.1%.)
A) 4.9%
B) -10.0%
C) 13.6%
D) -7.6%

Question

Pascal Corporation manufactures numerous products, one of which is called Gamma66. The company has provided the following data about this product:
 
-Assume that the total traceable fixed expense does not change.If Pascal decreases the price of Gamma66 to $48.96,what percentage change in unit sales would provide the same net operating income as is currently being earned at a price of $51.00? (Your answer should be rounded to the nearest 0.1%.)
A) 4.9% 
B) -10.0% 
C) 13.6% 
D) -7.6%

Quizplus · Accepted Answer

Profit = (P - V) × Q - Fixed expenses
$130,000 = ($48.96 per unit - $34.00 per unit) × Q - $1,570,000
$1,700,000 = ($48.96 per unit - $34.00 per unit) × Q
$1,700,000 = ($14.96 per unit) × Q
Q = $1,700,000 ÷ $14.96 per unit = 113,637 units (rounded up)
Percentage change in unit sales = (113,637 units − 100,000 units) ÷ 100,000 units = 13.6% (rounded)

Pascal Corporation Manufactures Numerous Products, One of Which Is Called