E5-14 Naylor Company had $210,000 of net income in 2013 when the selling price per unit was $150, the variable costs per unit were $90, and the fi xed costs were $570,000. Management expects per unit data and total fi xed costs to remain the same in 2014. The president of Naylor Company is under pressure from stockholders to increase net income by $52,000 in 2014. Instructions (a) Compute the number of units sold in 2013. (b) Compute the number of units that would have to be sold in 2014 to reach the stock- holders’ desired profi t level. (c) Assume that Naylor Company sells the same number of units in 2014 as it did in 2013. What would the selling price have to be in order to reach the stockholders’ desired profit level?
E5-14 Naylor Company had $210,000 of net income in 2013 when the selling price per
unit was $150, the variable costs per unit were $90, and the fi xed costs were $570,000.
Management expects per unit data and total fi xed costs to remain the same in 2014. The
president of Naylor Company is under pressure from stockholders to increase net income
by $52,000 in 2014.
Instructions
(a) Compute the number of units sold in 2013.
(b) Compute the number of units that would have to be sold in 2014 to reach the stock-
holders’ desired profi t level.
(c) Assume that Naylor Company sells the same number of units in 2014 as it did in 2013.
What would the selling price have to be in order to reach the stockholders’ desired profit level?
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