Johansen Company had $150,000 of operating income in 2012 when the selling price per unit was $150, the variable costs per unit were $90, and the fixed costs were $570,000. Management expects per-unit data and total fixed costs to remain the same in 2013. The president of Johansen Company is under pressure from shareholders to increase operating income by $60,000 in 2013.
Instructions
(a) Calculate the number of units sold in 2012.
(b) Calculate the number of units that would have to be sold in 2013 to reach the shareholders' desired profit level.
(c) Assume that Johansen Company sells the same number of units in 2013 as it did in 2012. What would the selling price have to be in order to reach the shareholders' desired profit level?