Question

Carla Vista Monograms sells stadium blankets that have been monogrammed with high school and university emblems. The blankets retail for $49 throughout the country to loyal alumni of over 1,700 schools. Carla Vista's variable costs are 40% of sales; fixed costs are $120,000 per month. (a1) ✓ Your answer is correct. Calculate contribution margin ratio. (Round ratio to 2 percentage places, e.g. 0.38 - 38%.) Contribution margin ratio 60 % e Textbook and Media Attempts: 1 of 12 used (22) Your answer is correct. What is Carla Vista's annual breakeven point in sales dollars? (Use the rounded contribution margin ratio calcuated in the previous part to compute breakeven sales.) Breakeven sales $ 2,400,000 e Textbook and Media Attempts: 1 of 12 used Your answer is incorrect. Carla Vista currently sells 150,000 blankets per year. If sales volume were to increase by 17%, by how much would operating income increase? (Round answer to 0 decimal places, e.g. 5,275.) Operating income e Textbook and Media Save for Later Attempts: 1 of 12 used Submit Answer

Answer 1

Answer : $749,700

Increase in Operating income =

= Contribution Margin Per Unit *( Current Units * increase in sales Units)

Contribution Margin Per Unit = 49*( 1-40%) = $29.40

Increase in Operating income = $29.40*(150,000*17%) = $ 749,700 (Answer)