16) Brielle Company sells glass vases at a wholesale price of $2.50 per unit. Th

Question

16) Brielle 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. Brielle’s current sales are 25,000 units per month. If Brielle wants to increase operating income by 20%, how many additional units, must Brielle sell? (Round your intermediate calculations to two decimal places)

A) 145,000 glass vases

B) 7,500 glass vases

C) 13,500 glass vases

D) 3,000 glass vases

Note: Supporting computations are required for this problem. Failure to do so will result in loss of points.

Explanation / Answer

Current operating income = ($2.50 - $1.75)* 25,000 - $7,500 = $11,250

Target income                   = 11,250 @20%                   = $2,250

Addittional units that need to be sold = $2250/.75   = 3000 glass vases

option D

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