Naylor Company had $210,000 of net income in 2016 when the selling price per unit was $150, the variable costs per unit were $90, and the fixed costs were $570,000. Management expects per unit data and total fixed costs to remain the same in 2017. The president of Naylor Company is under pressure from stockholders to increase net income by $52,000 in 2017.
Instructions
a. Compute the number of units sold in 2016.
b. Compute the number of units that would have to be sold in 2017 to reach the stockholders' desired profit level.
c. Assume that Naylor Company sells the same number of units in 2017 as it did in 2016. What would the selling price have to be in order to reach the stockholders' desired profit level?
Compute net income under different alternatives.