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$90,000, how many packages will it have to sell to generate $29,000of operating income? Is this more or less than before? Why? Begin by identifying the formula to compute the sales in units at various levels of operating income using the contribution margin approach. + ) ÷ = Sales in units

$90,000, how many packages will it have to sell to generate $29,000of operating income? Is this more or less than before? Why? Begin by identifying the formula to compute the sales in units at various levels of operating income using the contribution margin approach. + ) ÷ = Sales in units

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sport ready produces sports socks. The company has fixed expenses of $75,000 and variable expenses of $0.75 per package. Each package sells for $1.50. The number of packages Sport Ready needed to sell to earn a $29,000 operating income was 138,667 packages (rounded). If Sport Ready can decrease its variable costs to $0.65 per package by increasing its fixed costs to $90,000, how many packages will it have to sell to generate $29,000 of operating income? Is this more or less than before? Why? Begin by identifying the formula to compute the sales in units at various levels of operating income using the contribution margin approach. ( + ) ÷ = Sales in units
Transcribed Image Text:Sport ready produces sports socks. The company has fixed expenses of $75,000 and variable expenses of $0.75 per package. Each package sells for $1.50. The number of packages Sport Ready needed to sell to earn a $29,000 operating income was 138,667 packages (rounded). If Sport Ready can decrease its variable costs to $0.65 per package by increasing its fixed costs to $90,000, how many packages will it have to sell to generate $29,000 of operating income? Is this more or less than before? Why? Begin by identifying the formula to compute the sales in units at various levels of operating income using the contribution margin approach. ( + ) ÷ = Sales in units
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