Question

Sunlight Design Corporation sells glass vases at a wholesale price of $4.50 per unit. The variable cost to manufacture is $1.75 per unit. The monthly fixed costs are $8500. Its current sales are 29,000 units per month. If the company wants to increase its operating income by 20 % , how many additional units must it sell? (Round any intermed iate calculations to two decimal places and your final answer up to the nearest whole unit.) A) 34,182 glass vases C) 8500 glass vases 9 B) 130,500 glass vases D) 5182 glass vases

Answer 1

Answer:

D) 5182 glass vases

Explanation:

Contribution per glass vases:

$4.5 selling price - $ 1.75 variable cost= 2.75

Operating income:

29,000 units x $ 2.75 - $ 8,500 = $71,250 operating income

Target income is to obtain a 20% increase:

71,250 x (1 + 20%) = 85,500 target income:

units needed for target income:

(85,500 target income + 8,500 fixed cost) / 2.75 contribution per unit= 34.181,81

aditional glass vases needed for target income:

34,182 - 29,000 = 5,182