Response to the following problem:
The following information relates to Carter Limited for the year to 30 April 2012:
Units sold: 50,000
Selling price per unit .................$40
Net profit per unit .....................$9
Profit/volume ratio .....................40%
During 2013 the company would like to increase its sales substantially, but to do so it would have to reduce the selling price per unit by 20 per cent. The variable cost per unit will not change, but because of the increased activity the company will have to invest in new machinery which will increase the fixed costs by $30,000 per annum.
Required:
Given the new conditions, calculate how many units the company will need to sell in 2013 in order to make the same amount of profit as it did in 2012.