Question
Show All Your Works For Your Response: Fill Out 1 White Blanks Below Socks Unlimited produces...
Show All Your Works For Your Response: Fill Out 1 White Blanks Below Socks Unlimited produces sport socks. The company has fixed expenses of $85,000 and variable expenses of $1.20 per package. Each package sells for $2.00. The number of packages Socks Unlimited needed to sell to earn an $22,000 operating income was 133,750 packages. If Socks Unlimited can decrease its variable costs to $1.00 per package by increasing its fixed costs to $100,000, how many packages will it have to sell to generate $22,000 of operating income? Is this more or less than before? Why? Is this more or less than before? Why? Socks Unlimited would have to sell fewer packages of socks to earn $22,000 of operating income. The increase in fixed costs was completely offset by the decrease in variable costs at the prior target profit volume of sales. Therefore, Socks Unlimited will need to sell fewer units in order to achieve its target profit level
Answers
Answer
11,750
Calculations:
Sales for Desired profit = (Fixed cost + Profit) / Contribution per unit
= (100,0000 + 22,000) / 1
= 122,000 units
Change in units = 133,750 - 122,000 = 11,750
In case of any doubt, please comment.
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