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.)

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2 October, 06:38

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.)

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Ryan Mcintyre · Answer 1

5,182 Units

Explanation:

The computation of additional units is given below:-

Operating income = Contribution Margin Per unit * Units - Fixed cost

= ($4.50 - $1.75) * 29,000 - 8,500

= $71,250

Operating income is increased by 20%

Operating income = $71,250 * 1.20

= $85,500

So, per units

$85,500 = ($4.50 - $1.75) * Units - 8,500

= $94,000 : 2.75

= 34,181.82

Additional Units

= 34,181.82 - 29,000

= 5,182 Units