7. Gross profit determination. The Davidson Corporation manufactures a kitchen appliance to sell for $280....
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7. Gross profit determination. The Davidson Corporation manufactures a kitchen appliance to sell for $280. Last year the company sold 2,000 of these appliances, realizing a gross profit of 25% of the cost of goods sold. Of this total cost of goods sold, materials accounted for 40% of the total and factory overhead for 15%. During the coming year, it is expected that materials and labor costs will each increase 25% per unit and that factory overhead will increase 12% per unit. To meet these rising costs, a new sales price must be set. Required: The number of units that must be sold to realize the same total gross profit in the coming year as realized last year if the new selling price is set at: (1) $300; (2) $325; (3) $350
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