The Blanket Company (TBC) manufactures two types of blankets. One is made of nylon.  The other is made of wool. The budgeted per-unit contribution margin for each product follows.

TBC expects to incur annual fixed costs of $716,000. The relative sales mix of the products is 80 percent for Nylon and 20 percent for Wool.

Required

a. Determine the total number of products (units of Nylon and Wool combined) TBC must sell to earn a $100,000 profit.

b. How many units each of Nylon and Wool blankets must TBC sell to earn a $100,000 profit?

c. Confirm the answer computed in Requirement b by preparing an income statement using the contribution margin format.

Transcribed Image Text:

Sales price Variable cost per unit Nylon Wool $ 136 $ 188 (88) $ 100 (76) Contribution margin per unit $ 60