Hayduke Corporation reported the following results from the sale of 6,000 units in May: sales $300,000, variable costs $180,000, fixed costs $90,000, and net income $30,000.Assume that Hayduke increases the selling price by 10% on June 1.How many units will have to be sold in June to maintain the same level of net income?
A)4,800.
B)5,160.
C)5,400.
D)6,000.

Question

Quizplus · Accepted Answer

To maintain the same net income, the contribution margin must remain the same. With a 10% increase in selling price, the new selling price per unit is $55. The contribution margin per unit becomes $25. To achieve a net income of $30,000, Hayduke needs to cover $90,000 in fixed costs and $30,000 in net income, requiring a total contribution margin of $120,000. Dividing $120,000 by the new contribution margin per unit ($25) gives 4,800 units.

Hayduke Corporation Reported the Following Results from the Sale of 6,000