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Babymart, inc. manufactures baby cribs and currently has fixed costs of $50,000 and a sales price per unit of $315. babymart is expecting the variable costs of its baby cribs to increase from $90 to $115 due to an increase in prices by one of the company's major raw materials suppliers. babymart plans to cut fixed costs by $5,000 but is going to hold the line on the selling price of its cribs. babymart currently has monthly net income of $40,000 on sales of 400 cribs. to maintain the same level of income, babymart will need to sell an additional ________ units per month.

Respuesta :

nobillionaireNobley
Let the additional number of units, babymart need to sell be x, then

Revenue = $315(400 + x)

New fixed cost = $50,000 - $5,000 = $45,000

Thus, Total cost = $115(400 + x) + $45,000

Net income = Revenue - Total cost = 315(400 + x) - 115(400 + x) - 45,000 = 40,000

⇒ 200(400 + x) = 40,000 + 45,000
⇒ 80,000 + 200x = 85,000
⇒ 200x = 85,000 - 80,000 = 5,000
⇒ x = 5,000 / 200 = 25

Therefore, the additional number of units babymart needs to sell to maintain the same level of income is 25 units.
soneyedesola44

The additional number of units babymart needs to sell to maintain the same level of income is 25 units.

  • The fixed cost = $50,000 - $5,000 = $45,000
  • The total revenue = $315
  • The variable cost = $115
  • Let X represents the additional number of unit

Further Explanation

Therefore,

The total revenue = $115 × x

The variable cost = $ 315 × X

To determine the Net income, we have to subtract the total revenues from the total expenses. This can be expressed as:

Net income = Total revenue – Total expenses

If we substitute the above value, then we have

Recall, net income = 40,000, therefore we have:

40,000 = (315 × x) – 45,000 – (115X)

40,000 + 45,000 = (315 × X) (115 × X)

85,000 = (315x) – (115x)

85000 = 200X (divide both side by 200)

85,000 / 200 = 200X / 200

425 = X

X = 425

Therefore, we have to subtract the derived value from the monthly sale (400) cribs

Thus, 425 – 400

= 25.

Therefore, the additional number of units babymart needs to sell to maintain the same level of income is 25 units.

LEARN MORE:

  • Babymart, inc. manufactures baby cribs and currently has fixed costs of $50,000 and a sales price per unit of $315. https://brainly.com/question/13665184
  • Babymart, inc. manufactures baby cribs and currently has fixed costs of $50,000 and a sales price per unit of $315. https://brainly.com/question/13665184

KEYWORDS:

  • babymart inc
  • baby cribs
  • variable cost
  • total cost
  • fixed costs
  • raw materials