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Hynuj Limited sells executive office chairs for a price of $210 each. The contribution margin ratio of the chairs is 60% and the company's fixed costs for this year are expected to be $80,000. The company has a profit target this year of $100,000 and is considering an improved design which is expected to increase sales. Problem 1: How many chairs must the company sell to reach its profit target?
Problem 2: If the company decides to use the improved design, direct labour costs will increase by $10 per chair. How many chairs must the company now sell to reach its profit target, given the increased labour costs?
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