Question

Sunland Company had $186,200 of net income in 2019 when the selling price per unit was $150, the variable costs per unit were $90, and the fixed costs were $575,800. Management expects per unit data and total fixed costs to remain the same in 2020. The president of Sunland Company is under pressure from stockholders to increase net income by $38,100 in 2020. Collapse question part (a) Incorrect answer. Your answer is incorrect. Try again. Compute the number of units sold in 2019. Entry field with incorrect answer 13335 units

Answer 1

Answer: 12,700 units.

Explanation:

We are to compute the number of units sold.

Let's get the important figures first,

Net Income earned = $186,200

Fixed costs =$575,800

We'd need the Contribution margin which is the difference between the sales and the variable costs.

Another way to calculate it will be to add the net income and fixed assets so,

Contribution Margin earned = $186,200 + $575,800

= $762,000

Now we need to find out the Contribution Margin per unit to divide the Contribution Margin by,

Contribution Margin per unit = Selling price per unit – variable cost per unit

= 150-90

= $60

Now we can calculate the number of units sold like,

Number of units sold = 762,000/60

= 12,700 units

12,700 units were sold in 2019