Contribution Margin Ratio | ||
Selling Price per unit ($) | 40 | |
Variable Cost(VC) per unit (40% of Sales) $ | 16 | |
Therefore, Contribution margin = (Sales - VC) | 24 | |
Contribution Margin Ratio = (Contribution Margin / Sales) | 60% | |
Breakeven Sales | ||
Formula = (Fixed Cost / Contribution Margin Ratio) | ||
Fixed cost ($) | 120000 | |
Contribution Margin Ratio (from Above) | 60% | |
Therefore, Breakeven Sales ($) | 200000 | |
Computation of Increase in operating Income | ||
Particulars | Current | Increase by 15% |
Sales Volume | 116000 | 133400 |
Selling Price per unit ($) | 40 | 40 |
Variable Cost(VC) per unit (40% of Sales) $ | 16 | 16 |
Therefore, Contribution margin = (Sales - VC) | 24 | 24 |
Total Contribution for entire sales volume | 2784000 | 3201600 |
Fixed Cost for the year (120000*12) | 1440000 | 1440000 |
Operating Income = (Contribution - Fixed Cost) | 1344000 | 1761600 |
Therefore, increase in operating Income ($) | 417600 | |
Revised Breakeven Sales | ||
Selling Price per unit ($) (40 + 12%) | 44.80 | |
Variable Cost(VC) per unit (45% of current sale price, i.e 40) $ | 18.00 | |
Therefore, Contribution margin = (Sales - VC) | 26.80 | |
Contribution Margin Ratio = (Contribution Margin / Sales) | 59.82% | |
Fixed cost ($) | 132000 | |
Therefore, Breakeven Sales ($) = (Fixed Cost / Contribution Margin Ratio) | 220657 | |
Computation of Revised operating Income | ||
Particulars | Amount ($) | |
Sales Volume (116000-7%) | 107880 | |
Selling Price per unit ($) | 44.80 | |
Variable Cost(VC) per unit (40% of Sales) $ | 18.00 | |
Therefore, Contribution margin = (Sales - VC) | 26.80 | |
Total Contribution for entire sales volume | 2891184 | |
Fixed Cost for the year (132000*12) | 1584000 | |
Operating Income = (Contribution - Fixed Cost) | 1307184 |
Oullumber Monograms sells stadium blankets that have been monogrammed with high school and university emblems. The...
Cullumber Monograms sells stadium blankets that have been monogrammed with high school and university emblems. The blankets retail for $40 throughout the country to loyal alumni of over 1,600 schools. Cullumber's variable costs are 40% of sales; fixed costs are $120,000 per month. Assume that variable costs increase to 45% of the current sales price and fixed costs increase by $12,000 per month. If Cullumber were to raise its sales price by 12% to cover these new costs, what would...
Cullumber Monograms sells stadium blankets that have been monogrammed with high school and university emblems. The blankets retail for $42 throughout the country to loyal alumni of over 3,300 schools. Cullumber’s variable costs are 42% of sales; fixed costs are $116,000 per month. Assume that variable costs increase to 45% of the current sales price and fixed costs increase by $14,300 per month. If Cullumber were to raise its sales price by 11% to cover these new costs, what would...
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Cullumber Monograms sells stadium blankets that have been monogrammed with high school and university emblems. The blankets retail for $45 throughout the country to loyal alumni of over 4,000 schools. Cullumber’s variable costs are 42% of sales; fixed costs are $116,000 per month. Assume that variable costs increase to 45% of the current sales price and fixed costs increase by $12,500 per month. If Cullumber were to raise its sales price 11% to cover these new costs, but the number...
Cullumber Monograms sells stadium blankets that have been monogrammed with high school and university emblems. The blankets retail for $45 throughout the country to loyal alumni of over 4,000 schools. Cullumber’s variable costs are 42% of sales; fixed costs are $116,000 per month. Assume that variable costs increase to 45% of the current sales price and fixed costs increase by $12,500 per month. If Cullumber were to raise its sales price by 11% to cover these new costs, what would...
Cullumber Monograms sells stadium blankets that have been monogrammed with high school and university emblems. The blankets retail for $42 throughout the country to loyal alumni of over 3,300 schools. Cullumber’s variable costs are 42% of sales; fixed costs are $116,000 per month. Assume that variable costs increase to 45% of the current sales price and fixed costs increase by $14,300 per month. If Cullumber were to raise its sales price 11% to cover these new costs, but the number...
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Sandhill Monograms sells stadium blankets that have been monogrammed with high school and university emblems. The blankets retail for $50 throughout the country to loyal alumni of over 2,100 schools. Sandhill’s variable costs are 41% of sales; fixed costs are $118,000 per month. Assume that variable costs increase to 47% of the current sales price and fixed costs increase by $10,000 per month. If Sandhill were to raise its sales price by 11% to cover these new costs, what would...
Blossom Monograms sells stadium blankets that have been monogrammed with high school and university emblems. The blankets retail for $50 throughout the country to loyal alumni of over 3,500 schools. Blossom's variable costs are 40% of sales; fixed costs are $118,000 per month (c) Assume that variable costs increase to 45% of the current sales price and fixed costs increase by $15,000 per month. If Blossom were to raise its sales price by 10% to cover these new costs, what...