Question

iPad 2:36 PM 33% . Exercise 3-13 (Part Level Submission) Sandhill Monograms sels stadium blankets that have been menogrammed with high school and university emblems. The blankets retail for $50 throughout the country to loyal alumni of over 2,100 schools. Sandal's variable costs are 41% of sales; fixed costs are $118,000 per month Chapter3 (al) 因Exeros isetscentever Your answer is correct. Calculate contribution margin ratio. (Round ratio to 2 percentage places, eg. 0.38 38%.) Review Results by Study Objectiwe Contribution margin ratio Attempts:1 of 15 used (a2) What is Sandhil's annual breakeven point in sales dollars? (Use the rounded contribution margin ratio calcuated in the previous part to compute breakeven sales) 2,400,000 Attemptsi 1 of 1S used Y (b) Sandhill currently sells 100,000 blankets per year. if sales volume were to increase by 17%, by how much would operating income increase? (Round answer to O decimal places, e-g. 5,275) 501,500 Operating income Attempts: 3 of 15 used 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 1 1% to cover these new costs, what would be the new annual breakeven point in sales dollars? (Round sales price to 2 decimal places, e.g. 52.75 and final answer to O decimal places,eg. 5,275.) 2,664,000 Breakeven sales

Answer 1

(d) The new annual operating income $1,472,000

Working:

Variable costs = 47% x $50 = $23.50

Fixed costs = ($118000 + $10000) x 12 = $1536000

Sales price = $50 x 1.11 = $55.50

Number of blankets sold = 100000 x 0.94 = 94000

Contribution Income Statement
	Total	Per Unit
Sales (94000 units)	5217000	$    55.50
Variable expenses	2209000	23.50
Contribution margin	3008000	$    32.00
Fixed expenses	1536000
Operating income	1472000