Blue Spruce Company had $152,800 of net income in 2016 when the selling price per unit was $152, the variable costs per unit were $92, and the fixed costs were $570,700. Management expects per unit data and total fixed costs to remain the same in 2017. The president of Blue Spruce Company is under pressure from stockholders to increase net income by $62,200 in 2017.

Compute the number of units sold in 2016.

Question

Business

Lyric Spence

15 July, 19:53

Blue Spruce Company had $152,800 of net income in 2016 when the selling price per unit was $152, the variable costs per unit were $92, and the fixed costs were $570,700. Management expects per unit data and total fixed costs to remain the same in 2017. The president of Blue Spruce Company is under pressure from stockholders to increase net income by $62,200 in 2017.

Compute the number of units sold in 2016.

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Answers (1)

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Keegan Parsons · Answer 1

The number of units sold in 2016 is 12,058 units

Explanation:

The number of units sold in the year 2016 is simply the total revenue in 2016 divided by selling price per unit.

Total revenue = net income+total variable cost+total fixed cost

net income for 2016 is $152,800

assuming X units were sold

total variable cost = $92*X

fIxed cost = $570,700

total revenue=$152*X

152X=152800+92X+570700

152X-92X=152800+570700

60X = 723500

X = 723500 / 60

X=12058.33

Alternatively, the number of units sold is total contribution divided by contribution per unit