Question

Question 3 of 4 2.08 / 6.25 E 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 2,100 schools. Blossom's variable costs are 43% of sales, fixed costs are $114,000 per month (a 1) Your answer is correct. Calculate contribution margin ratio. (Round ratio to 2 percentage places, eg. 0.38 - 38%.) 57 Contribution margin ratio %6 (b) X Your answer is incorrect Blossom currently sells 148,000 blankets per year. If sales volume were to increase by 16%, by how much would operating income increase? (Round answer to decimal places, e.g. 5,275.) 4778890 2 Operating income eTextbook and Media

Answer 1

Answer:

Increase in Sales Volume            = No. of Blankets Currently Sold x % of Increase            =    148,000 blankets x 16%            =    23,680

Variable Cost ratio   = 43% of Sales

Contibution Margin Per Unit               = Sale price x ( 1 - Variable Cost ratio )               =   $ 50 x ( 1 (-) 43% )               =   $ 50 x 0.57               =     $ 28.50

Increase in Operating income              = Increase in Sales Volume x Contibution Margin Per Unit              = 23,680 x $ 28.50              =    $ 674,880

Operating income      =    $ 674,880