# Newman Company currently produces and sells 7,000 units of a product that has a contribution margin of \$9 per unit. The company sells the product for a sales price of \$23 per unit. Fixed costs are \$20,000. The company is considering investing in new technology that would decrease thevariable cost per unit to \$11 per unit and double total fixed costs. The company expects the new technology to increase production and sales to 12,000 units of product. What sales price would have to be charged to earn a \$80,000 target profit assuming the investment in technology is made?Multiple Choice\$16\$23\$21\$11

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Step 1

Target Profit: It refers to the desired amount of profit that a company expects to achieve by the end of an accounting period after it reaches its break-even point. Thus, the company needs to compute the required sales to earn the target profit.

Step 2

Calculate the new selling price ...

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