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. Trevor wants to make an annual operating income of $37,823 at a sales price of $18.00 per unit. How many of these units would Trevor have to sale working on his own? Round final answer to the nearest whole unit.
A) 2,102 units
B) 5,888 units
C) 5,911 units
D) 6,232 units

Question

Quizplus · Accepted Answer

This question requires familiarity with calculating various components of operating income utilizing the following formula: Sales - Variable Costs - Fixed Costs = Operating Income. To calculate this, first assume annual sales is X. Hence, ($18.00 - $10.00) X - ($773.00 × 12) = $37,823. $8.00X - $9,276 = $37,823. Annual Sales, X = ($37,823 + $9,276)/$8.00 = 5,887.375 or 5,888 units (Choice B).

Trevor Sculpts Unique Vases for Houseplant When He Is Not