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E5-14 Naylor Company had $210,000

Price: $2.50


Naylor Company had $210,000 of net income in 2013 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 2014. The
president of Naylor Company is under pressure from stockholders to increase net income
by $52,000 in 2014.

Instructions
(a) Compute the number of units sold in 2013.
(b) Compute the number of units that would have to be sold in 2014 to reach the stockholders’
desired profit level.
(c) Assume that Naylor Company sells the same number of units in 2014 as it did in 2013.
What would the selling price have to be in order to reach the stockholders’ desired
profit level?

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