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The following information relates to Yellow Ltd for the year to 30 June 2014:
Units sold 50,000
Selling price per unit £40
Net profit per unit £9
Contribution to sales ratio 40%
During 2015, the company would like to increase its sales, but to do so would have to reduce price by 20 per cent. The variable cost per unit would not change, but due to increased activity, overhead will increase fixed costs by £30,000 per annum.
Required: Calculate how many units the company will need to sell in 2015 in order to make the same level of profit as 2014.
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