Towing Company manufactures and sells a single product for $40 per unit.Variable costs are $30 per unit and fixed costs total $168,000. During2019, the company sold 26,500 units of this product to customers. Inorder to improve profitability, the president of Towing Company believesthe following changes should be made in 2020:1. decrease the selling price of the product by 10%2. automate a portion of the production process which will reduce variable costs by 5% per unit but will add an additional fixed cost of $16,310 per year3. increase advertising by $49,420Assume these changes are made. A) Calculate the number of units that Towing Company must sell in 2020 in order to earn a net income that is 20% greater than the net income earned in 2019.
B) Calculate the number of units that Towing Companymust sell in 2020 in order to earn a target profit equal to 12% ofsales.
