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Happy Feet produces sports socks. The company has fixed expenses of $$95,000$ and variable expenses of $$0\mathrm{.}95$ per package. Each package sells for $$1\mathrm{.}90.$ The number of packages Happy Feet needed to sell to earn a $$23,000$ operating income was $124,211$ packages $($rounded$).$ If Happy Feet can decrease its variable costs to $$0\mathrm{.}75$ per package by increasing its fixed costs to $$110,000,$ how many packages will it have to sell to generate $$23,000$ of operating income? Is this more or less than before? Why?

Begin by identifying the formula to compute the sales in units at various levels of operating income using the contribution margin approach.

Fixed expenses $,$ Of $9$ rating income $=$ Sales in units

Happy Feet produces sports socks. The company has fixed expenses of $$95,000$ and variable expenses of $$0\mathrm{.}95$ per package. Each package sells for $$1\mathrm{.}90.$ The number of packages Happy Feet needed to sell to earn a $$23,000$ operating income was $124,211$ packages $($rounded$).$ If Happy Feet can decrease its variable costs to $$0\mathrm{.}75$ per package by increasing its fixed costs to $$110,000,$ how many packages will it have to sell to generate $$23,000$ of operating income? Is this more or less than before? Why?

Begin by identifying the formula to compute the sales in units at various levels of operating income using the contribution margin approach.

$($ Operating income

Fixed expenses

$$ Contribution margin per unit $=$

Sales in units

$($Round your answer up to the nearest whole unit.$)$

Happy Feet will have to sell packages to generate $$23,000$ of operating income.

Is this more or less than before? Why?

Happy Feet would have to sell packages of socks to earn $$23,000$ of operating income.

The increase in fixed costs completely offset by the in variable costs at the prior target profit volume of sales. Therefore, Happy Feet will need to sell $]$ units in order to achieve its target profit level.

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