Trevor sculpts unique vases for houseplant when he is not working as a full-time vet technician at a small, family practice. Trevor's side business has grown exponentially, and he would like to hire someone to help manage the online ordering system and pack orders for shipment. Currently, the monthly costs of his business include: Variable Costs of $10.00 per unit and fixed costs of $773.00. Hiring an assistant would increase his monthly costs by $5,423.00. If Trevor decides to hire the assistant, then how many additional units would he have to sell in a year to generate an annual operating income of $37,823 if the sales price is $18.00 per unit? Round final answer to the nearest whole unit.
A) 519 units
B) 6,228 units
C) 9,527 units
D) 14,022 units

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. To calculate this, assume that the annual sales amount is X. Hence, ($18.00 - $10.00) X - ($5,423 × 12) - ($773.00 × 12) = $37,823. $8.00X - $65,076 - $9,276 = $37,823. Annual Sales, X = ($37,823 + $65,076 + $9,276)/$8.00 = 14,021.88 or 14,022 units (Choice D).

Trevor Sculpts Unique Vases for Houseplant When He Is Not