Reference no: EM133004053

Use the following information for Smith Merchandising:

Material cost per unit $24 each

Transportation-in (per case of 100 units) $300 per case

Advertising $50,000

Rent $20,000

Salaries $80,000

Salaries are office salaries; rent is for office space

Problem 1: Smith Merchandising is attempting to increase sales by changing the current packaging. They will change the colors on the box and in their advertising campaign. This will result in an increase of $1 per unit in material cost and $5,000 in their advertising. They are currently selling 10,000 units, and all other costs and pricing polices (60% mark-up of product cost) will remain the same while they maintain the same level of income $60,000. How many units do they need to sell to achieve this target profit of $60,000 together with the cost changes? (rent and salary are office expenses, selling price is 60% mark-up of product cost)

a. 10,000

b. 10,239

c. 12,798

d. 13,393