Baird Company produces a product that has a variable cost of $26 per unit and a sales price of $58 per unit. The company's annual fixed costs total $740,000. It had net income of $300,000 in the previous year. In an effort to increase the company's market share, management is considering lowering the selling price to $51 per unit.
Required
a. If Baird desires to maintain net income of $300,000, how many additional units must it sell to justify the price decline?
b. Assume that in addition to lowering its selling price to $51, Baird also desires to increase its net income by $75,000. Determine the number of units the company must sell to earn the desired income.
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Required A Required B
If Baird desires to maintain net income of $300,000, how many additional units must it sell to justify the price decline?
Additional units required
units