Naylor Company had $154,200 of net income in 2016 when the selling price per unit was $155, the variable costs per unit were $95, and the fixed costs were $572,900. 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 $61,200 in 2017. Compute the number of units sold in 2016.

Units sold in 2016 = 12118.33

Explanation:

Given that

Net income = 154200

Fixed inputs = 572900

Selling price per unit = 155

Variable cost per unit = 95

Recall that

Net income = total revenue - total expenses

And that

Net income = (selling price - variable cost) × number of goods sold - fixed cost

Thus

154200 = (155 - 95)x - 572900

572900 + 154200 = 60x

727100 = 60x

x = 727100/60

x = 12,118.33 units

The number of units sold in 2016 is 12,118 units

Explanation:

Number of units to sold in 2016=fixed costs+target profit/contribution per unit

fixed costs is $572,900

target profit=$154,200

Contribution per unit =selling price per unit -variable cost per unit

selling price per unit is $155

variable cost per unit is $95

contribution per unit=$155-$95

contribution per unit =$60

Number of units sold in 2016=($572,900+$154,200)/$60

number of units sold in 2016=$727,100/$60

number of units sold in 2016= 12,118.33  units

the number of units sold in 2016 is 12,118

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