Reppond Corporation manufactures numerous products, one of which is called Gamma38. The company has provided the following data about this product: Assume that the total traceable fixed expense does not change. How many units of product Gamma38 would Reppond need to sell at a price of $94.05 to earn the same net operating income that it currently earns at a price of $99.00? (Round your answer up to the nearest whole number.)
A) 177,897
B) 200,000
C) 151,212
D) 187,000

Question

Reppond Corporation manufactures numerous products, one of which is called Gamma38. The company has provided the following data about this product:  Assume that the total traceable fixed expense does not change. How many units of product Gamma38 would Reppond need to sell at a price of $94.05 to earn the same net operating income that it currently earns at a price of $99.00? (Round your answer up to the nearest whole number.)
A) 177,897 
B) 200,000 
C) 151,212 
D) 187,000

Quizplus · Accepted Answer

Profit at the current price:
 11eacbfc_c82d_9974_8ffe_adfa2b66dca3_TB7552_00 Profit = (P − V) × Q − Fixed expenses
$620,000 = ($94.05 per unit − $66.00 per unit) × Q − $4,990,000
$5,610,000 = ($94.05 per unit − $66.00 per unit) × Q
$5,610,000 = ($28.05 per unit) × Q
Q = $5,610,000 ÷ $28.05 per unit = 200,000 units (rounded up)

Reppond Corporation Manufactures Numerous Products, One of Which Is Called