Mays Company Had $125,000 of Net Income in 2010 When

question 161

Essay

Mays Company had $125,000 of net income in 2010 when the selling price per unit was $100, the variable costs per unit were $60, and the fixed costs were $475,000. Management expects per unit data and total fixed costs to remain the same in 2011. The president of Mays Company is under pressure from stockholders to increase net income by $75,000 in 2011.
Instructions
(a) Compute the number of units sold in 2010.
(b) Compute the number of units that would have to be sold in 2011 to reach the stockholders' desired profit level.
(c) Assume that Mays Company sells the same number of units in 2011 as it did in 2010. What would the selling price have to be in order to reach the stockholders' desired profit level.

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Definitions:

Left Cerebral Hemisphere

The left side of the brain, which controls the right side of the body and is commonly associated with analytical thought, language, and logic.

Speech Production

The complex process involving the coordination of mental and physical activities to produce spoken language.

Association Areas

Regions of the brain that integrate information from various parts of the brain to perform more complex functions, including reasoning, problem-solving, and interpreting sensory information.

Sensory Information

Data received by the sensory organs (eyes, ears, skin, tongue, and nose), which is then interpreted by the brain.