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 intermediate calculations to two decimal places and your final answer up to the nearest whole unit.)

Question

Alyssa Michael

Business

10 March, 10:19

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 intermediate calculations to two decimal places and your final answer up to the nearest whole unit.)

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Answers (1)

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Ahmad Alexander · Answer 1

5,182 Units

Explanation:

The computation of additional units is given below:-

Operating income = Contribution Margin Per unit * Units - Fixed cost

= ($4.50 - $1.75) * 29,000 - 8,500

= $71,250

Operating income is increased by 20%

Operating income = $71,250 * 1.20

= $85,500

So, per units

$85,500 = ($4.50 - $1.75) * Units - 8,500

= $94,000 : 2.75

= 34,181.82

Additional Units

= 34,181.82 - 29,000

= 5,182 Units