Required information

PR $7-34($Static$)$ Basic CVP Relationships; Retailer $($LO $7-1,7-2,7-4)$

$[$The following information applies to the questions displayed below.$]$

Disk City, Incorporated, is a retailer for digital video disks. The projected net income for the current year is $$200,000$

based on a sales volume of $200,000$ video disks. Disk City has been selling the disks for $$16$ each. The variable costs

consist of the $$10$ unit purchase price of the disks and a handling cost of $$2$ per disk. Disk City's annual fixed costs are

$$600,000.$

Management is planning for the coming year, when it expects that the unit purchase price of the video disks will increase

$30$ percent. $($Ignore income taxes.$)$

PR $7-34($Static$)$ Part $1$: Disk City, Incorporated, is a retailer for digital video disks.

Required:

Calculate Disk City's break$-$even point for the current year in number of video disks.

What will be the company's net income for the current year if there is a $10$ percent increase in projected unit sales volume?

What volume of sales $($in dollars$)$ must Disk City achieve in the coming year to maintain the same net income as projected for the

current year if the unit selling price remains at $$16?$

Note: Do not round intermediate calculations.

In order to cover a $30$ percent increase in the disk's purchase price for the coming year and still maintain the current contribution$-$

margin ratio, what selling price per disk must Disk City establish for the coming year?

Note: Do not round intermediate calculations.