Cogdill Corporation manufactures numerous products,one of which is called Epsilon78.The company has provided the following data about this product:
Assume that the total traceable fixed expense does not change.If Cogdill increases the price of Epsilon78 to $19.76,what percentage change in unit sales would provide the same net operating income as is currently being earned at a price of $19.00? (Your answer should be rounded to the nearest 0.1%.)
A) -14.7%
B) -28.3%
C) -5.0%
D) -16.0%

Question

Cogdill Corporation manufactures numerous products,one of which is called Epsilon78.The company has provided the following data about this product:
 Assume that the total traceable fixed expense does not change.If Cogdill increases the price of Epsilon78 to $19.76,what percentage change in unit sales would provide the same net operating income as is currently being earned at a price of $19.00? (Your answer should be rounded to the nearest 0.1%.)
A) -14.7% 
B) -28.3% 
C) -5.0% 
D) -16.0%

Quizplus · Accepted Answer

Profit at the current price:
 11ea7761_163b_2836_81a5_539ba6673a88_TB2580_00 Profit = (P - V) × Q - Fixed expenses
$100,000 = ($19.76 per unit - $15.00 per unit) × Q - $580,000
$680,000 = ($19.76 per unit - $15.00 per unit) × Q
$680,000 = ($4.76 per unit) × Q
Q = $680,000 ÷ $4.76 per unit = 142,858 units (rounded up)
Percentage change in unit sales = (142,858 units − 170,000 units) ÷ 170,000 units = -16.0% (rounded)

Cogdill Corporation Manufactures Numerous Products,one of Which Is Called Epsilon78