Pascal Corporation manufactures numerous products, one of which is called Gamma-66. 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 Gamma-66 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 Gamma-66. 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 Gamma-66 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