Kelsey has been making soy candles for friends and family for many years. Recently she debated making an official website to sell her candles to the general public. Her variable cost is $4.20 per unit, and she would sell each candle for $10.00. Her fixed costs will be $418.00 per month. How many units would she need to sell per month, on average, to completely replace her monthly salary of $4,268? Round your final answer to the nearest whole unit.

Question

Quizplus · Accepted Answer

This question requires familiarity with calculating various components of operating income using the following formula: Sales - Variable Costs - Fixed Costs = Operating Income. In this question, the operating income is not known, but the operating income would have to be at least equal to her monthly salary of $4,268. Now, solve for sales: ($10.00 - $4.20) X - $418.00 = $4,268. To calculate the units that would need to be sold: X = $4,686.00/$5.80 = 807.93 or 808 units (Choice D).

Kelsey Has Been Making Soy Candles for Friends and Family