Chruch Corporation manufactures numerous products, one of which is called Tau-42. The company has provided the following data about this product: Assume that the total traceable fixed expense does not change. If Chruch decreases the price of Tau-42 to $60.16, what percentage change in unit sales would provide the same net operating income as is currently being earned at a price of $64.00? (Your answer should be rounded to the nearest 0.1%.)
A) 15.5%
B) 23.8%
C) (6.7)%
D) (10.0)%

Question

Chruch Corporation manufactures numerous products, one of which is called Tau-42. The company has provided the following data about this product:  Assume that the total traceable fixed expense does not change. If Chruch decreases the price of Tau-42 to $60.16, what percentage change in unit sales would provide the same net operating income as is currently being earned at a price of $64.00? (Your answer should be rounded to the nearest 0.1%.)
A) 15.5% 
B) 23.8% 
C) (6.7)% 
D) (10.0)%

Quizplus · Accepted Answer

Profit = (P − V) × Q − Fixed expenses
$80,000 = ($60.16 per unit − $44.00 per unit) × Q − $1,120,000
$1,200,000 = ($60.16 per unit − $44.00 per unit) × Q
$1,200,000 = ($16.16 per unit) × Q
Q = $1,200,000 ÷ $16.16 per unit = 74,258 units (rounded up)
Percentage change in unit sales = (74,258 units − 60,000 units) ÷ 60,000 units = 23.8% (rounded)

Chruch Corporation Manufactures Numerous Products, One of Which Is Called