How many additional units must be sold

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Question - Company A sells its product for $2.50 per unit and generates a 30% contribution margin percentage. The company's fixed costs are $6,500 per month. Company A is currently selling 15,000 units per month. If the company wants to increase operating income by 20%, how many additional units must be sold?

Company A manufactures custom-made products. On January 1 the company received an order from Customer 1. The job was completed and sold in January. During the month, $45 of direct materials were requisitioned and 6.25 direct labor hours were logged for the job. The company's direct laborers are paid at a rate of $8 per direct labor hour.

At the beginning of the year, the company estimated total manufacturing costs of $225,000 and total direct labor hours of 75,000. Manufacturing overhead is applied to jobs based on direct labor hours logged.

Reference no: EM133045907

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