Sunlight Design Corporation sells glass vases at a wholesale price of $4.50 per unit.The variable cost to manufacture is $1.75 per unit.The monthly fixed costs are $8500.Its current sales are 29,000 units per month.If the company wants to increase its operating income by 20%,how many additional units must it sell? (Round any intermediate calculations to two decimal places and your final answer up to the nearest whole unit.)

Question

Quizplus · Accepted Answer

To achieve a 20% increase in operating income, first calculate the current operating income. The contribution margin per unit is $4.50 - $1.75 = $2.75. Current operating income is (29,000 units * $2.75) - $8,500 = $71,750. A 20% increase is $71,750 * 20% = $14,350 additional income needed. To find additional units required: $14,350 / $2.75 = 5,218 units (rounded up).

Sunlight Design Corporation Sells Glass Vases at a Wholesale Price