Question

WP Collaborations WileyPLUS Support View Porces Show Attempt History Current Attempt in Progress Account Ivanhoe 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 3.500 schools. Ivanhoe's variable costs are 41% of sales: foxed costs are $118,000 per month Dashboard Courses (1) Calendar Inbox ✓ Your answer is correct. Get HELP Calculate contribution margin ratio. (Round ratio to 2 percentage places, e.. 0.38 - 38%.) Contribution margin ratio e Textbook and Media Attempts: 2 of 12 used (a2) What is Ivanhoe's annual breakeven point in sales dollars? (Use the rounded contribution margin ratio calcuated in the previous part to compute breakeven sales.) Breakeven sales $ e Textbook and Media Save for Later Attempts: 0 of 12 used Submit Answer (b) The parts of this question must be completed in order This part will be available when you complete the part above

Answer 1

Ans.

a1

Sales = $ 45

Variable Cost (41% of sales) = $ 45 *41% = $10.5165

Contribution = Sales - Variable cost = $45 - $ 18.45 = $ 26.55

Contribution Margin = Contribution / Selling price = $ 26.55/$45 = 0.59 or 59%

Contribution Margin =59%

a2.

Annual breakeven point in sales dollars

Fixed Cost per month = $ 118,000

Annual Fixed Cost = $ 118,000 * 12 = $ 1,416,000

Breakeven Sales (in dollars) = Annual Fixed Cost / Contribution Margin

Breakeven Sales (in dollars) = $ 1,416,000 / 59% = $ 2,400,000

Breakeven Sales = $ 2,400,000