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Detroit Disk, Inc. is a retailer for digital video disks. The projected net income for the current year is $3,020,000 based on a sales volume of...
Detroit Disk, Inc. is a retailer for digital video disks. The projected net income for the current year is $3,020,000 based on a sales volume of 290,000 video disks. Detroit Disk has been selling the disks for $18.00 each. The variable costs consist of the $4.00 unit purchase price of the disks and a handling cost of $2.00 per disk. Detroit Disk's annual fixed costs are $460,000.
Management is planning for the coming year, when it expects that the unit purchase price of the video disks will increase 20 percent. (Ignore income taxes.)
Required:1.Calculate Detroit Disk's break-even point for the current year in number of video disks.
