Question
Cullumber Monograms sells stadium blankets that have been monogrammed with high school and university emblems. The blankets retail for $40 throughout the country to loyal
Cullumber Monograms sells stadium blankets that have been monogrammed with high school and university emblems. The blankets retail for $40 throughout the country to loyal alumni of over 1,600 schools. Cullumbers variable costs are 40% of sales; fixed costs are $120,000 per month.
Assume that variable costs increase to 45% of the current sales price and fixed costs increase by $12,000 per month. If Cullumber were to raise its sales price 12% to cover these new costs, but the number of blankets sold were to drop by 7%, what would be the new annual operating income? 116,000 blankets sold!
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