Ask Question
12 November, 13:48

In 2019, Vaughn sold 1000 units at $500 each, and earned net income of $40000. Variable expenses were $300 per unit, and fixed expenses were $240000. The same selling price is expected for 2020. Vaughn's variable cost per unit will rise by 10% in 2020 due to increasing material costs, so they are tentatively planning to cut fixed costs by $10000. How many units must Vaughn sell in 2020 to maintain the same income level as 2019?

+5
Answers (1)
  1. 12 November, 14:00
    0
    Vaughn must sell 1588 Units in 2020 to maintain the same income level as 2019

    Explanation:

    Selling price for 2020 = 500 per unit

    Variable cost for 2020 = 300 x 10% + 300

    = 300 x 0.1 + 300

    = 30 + 300

    = 330 per unit

    Fixed cost for 2020 = 240000-10000

    = 230000

    Required unit = (Fixed cost+Net income) / Contribution margin per unit

    = (230000+40000) / (500-330)

    = 270000 / 170

    = 1588.24

    Required unit = 1588 Units
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “In 2019, Vaughn sold 1000 units at $500 each, and earned net income of $40000. Variable expenses were $300 per unit, and fixed expenses ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers