James Company sells glass vases at a wholesale price of $3 per unit.The variable cost of manufacture is $0.37 per unit.The monthly fixed costs are $7500.James's current sales are 28,000 units per month.If James wants to increase operating profit by 25%,how many additional units,must James sell? (Round your intermediate calculations to two decimal places.)

Question

Quizplus · Accepted Answer

To find the additional units needed to increase operating profit by 25%, first calculate the current profit: (28,000 units * ($3 - $0.37)) - $7,500 = $65,860. To increase this by 25%, the new profit should be $65,860 * 1.25 = $82,325. The additional profit needed is $82,325 - $65,860 = $16,465. The contribution margin per unit is $3 - $0.37 = $2.63. Therefore, additional units needed = $16,465 / $2.63 = 6,287 units.

James Company Sells Glass Vases at a Wholesale Price of $3