Bell Products manufactures packs of pesticides which are sold to farmers. Cost, volume and price data are as follows:
$$\begin{array} { | l | r | }
\hline \text { Pice per unit } & \$ 25.00 \
\hline \text { Variable cost per unit } & \$ 20.00 \
\hline \text { Fixed cost per month } & \$ 8,000 \
\hline \text { Current sales volume (units) } & 3,000 \
\hline
\end{array}$$
-
If Bell wishes to increase their current operating income by 10%, what volume of sales is needed?

Question

Bell Products manufactures packs of pesticides which are sold to farmers. Cost, volume and price data are as follows:
$$\begin{array} { | l | r | } 
\hline \text { Pice per unit } & \$ 25.00 \
\hline \text { Variable cost per unit } & \$ 20.00 \
\hline \text { Fixed cost per month } & \$ 8,000 \
\hline \text { Current sales volume (units) } & 3,000 \
\hline
\end{array}$$
-
If Bell wishes to increase their current operating income by 10%, what volume of sales is needed?

Quizplus · Accepted Answer

Explanation:Current operating income = (Price per unit - Variable cost per unit) * Current sales volume - Fixed cost per month= (25 - 20) * 3,000 - 8,000= 15,000To increase operating income by 10%, new operating income = 1.1 * 15,000 = 16,500New operating income = (Price per unit - Variable cost per unit) * New sales volume - Fixed cost per month16,500 = (25 - 20) * New sales volume - 8,000New sales volume = 3,200 units

Bell Products Manufactures Packs of Pesticides Which Are Sold to Farmers