Original DVD player sales and cost data for ABC Video: Unit Selling Price: Php 500 Unit variable cost: Php 300 Total fixed cost: Php 200,000 Break-even sales: Php 500,000 0r 1,000 units Case: Vargo’s principal supplier of raw materials has just announced a price increase. The higher cost is expected to increase the variable cost of DVD players by $25 per unit. Management decides to hold the line on the selling price of the DVD players. It plans a cost-cutting program that will save $17,500 in fixed costs per month. Vargo is currently realizing monthly net income of $80,000 on sales of 1,400 DVD players. Question: What increase in units sold will be needed to maintain the same level of net income?
Original DVD player sales and cost data for ABC Video:
Unit Selling Price: Php 500
Unit variable cost: Php 300
Total fixed cost: Php 200,000
Break-even sales: Php 500,000 0r 1,000 units
Case: Vargo’s principal supplier of raw materials has just
announced a price increase. The higher cost is expected to
increase the variable cost of DVD players by $25 per unit.
Management decides to hold the line on the selling price of the
DVD players. It plans a cost-cutting program that will save
$17,500 in fixed costs per month. Vargo is currently realizing
monthly net income of $80,000 on sales of 1,400 DVD players.
Question: What increase in units sold will be needed to
maintain the same level of net income?
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