Question

Knoll, inc. currently sells 15,000 units a month for $50 each, has variable costs of $20 per unit, and fixed costs of $300,000. knoll is considering increasing the price of its units to $60 per unit. if the price is changed, how many units will knoll need to sell for profit to remain the same as before the price change?

Answer 1

Cost per unit
(300,000÷15,000)+20=40

Current profit
50×15,000−40×15,000=150,000

Profit change
60×15,000−40×15,000=300,000

units will knoll need to sell for profit to remain the same as before the price change is
(150,000+300,000)÷40=11,250