Question

Question 3 of 4 < > 1.04/6.25 View Policies Show Attempt History Current Attempt in Progress 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. (a 1) Your answer is correct. Calculate contribution margin ratio. (Round ratio to 2 percentage places, eg, 0.38 - 38%) Contribution margin ratio 60 % e Textbook and Media Attempts: 2 of 12 used

Answer 1

Req1

Contribution margine ratio is 60%

Given variable cost per sales is 40%

Contribution margine ratio =100%-virable ratio on sales

=100%-40%

=60%

Req2

Given fixed cost per month is =118000

Per annum=118000×12

=1416000

Break even sales=fixed cost/Contribution margine ratio

=1416000/60%

=2360000

Req3

Given sales =103000

Sales price =50

Virable expenses 40%=50×40%=20

Sales (103000×50)	5150000
Virable expenses (103000×20)	2060000
Contribution margine	3090000
Fixed cost	1416000
Profit	1674000

Profit if 15%sales will increase

Sales (10300×50+15%)	5922500
Virable expenses (5922500×40%)	2369000
Congratulations margine	3553500
Fixed cost	1416000
Profit	2137500

Difference in profit=2137500-1674000

=463500

Percentage of increase in profit=463500/167400×100

=27.69%

Another way to calculate percentage of increasei profit

Degree of oprating leverage=contribution margine/profit

=3090000/1674000

=1.84857

1% sales lead 1.84857 %in profit

15% increase in profit will leads to 15%×1.84857

=27.69%