James Company sells glass vases at a wholesale price of $2.50 per unit. The variable cost of manufacture is $1.75 per unit. The monthly fixed costs are $7,500. James's current sales are 25,000 units per month. If James wants to increase operating income by 20%, how many additional units, must James sell? (Round your intermediate calculations to two decimal places)

Question

Quizplus · Accepted Answer

To increase operating income by 20%, calculate the current operating income, find the target income, and determine the additional units needed. Current income = (25,000 * ($2.50 - $1.75)) - $7,500 = $11,250. Target income = $11,250 * 1.2 = $13,500. Additional units = ($13,500 - $11,250) / ($2.50 - $1.75) = 3,000 units.

James Company Sells Glass Vases at a Wholesale Price of $2.50