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10 September, 19:30

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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  1. 10 September, 19:53
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    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
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