Thorton company produces a product that has a variable cost of $28 per unit and a sales price of $60 per unit. The company's annual fixed cost total $740,000. It had a net income of $300,000 in the previous year. In an effort to increase the company's market share, management is considering lowering the selling price to $54 per unit.
A. If Thorton desires to maintain a net income of $300,000, how many additional units must it sell to justify the price decline?
B. Assume in addition to lowering its selling price to $54, Thorton also desires to increase its net income by $78,000. Determine the number of units the company must sell to earn the desired income.