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Exercise 3-13 Sandhill Monograms sells stadium blankets that have been monogrammed with high school and university emblems. The blankets retail for $50 throughout the country
Exercise 3-13 Sandhill 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. Sandhill's variable costs are 41% of sales; fixed costs are $118,000 per month. Calculate contribution margin ratio. (Round ratio to 2 percentage places, e.g. 0.38 = 38%.) Contribution margin ratio What is Sandhill's annual breakeven point in sales dollars? (Use the rounded contribution margin ratio calcuated in the previous part to compute breakeven sales.) Breakeven sales $ Sandhill currently sells 100,000 blankets per year. If sales volume were to increase by 17%, by how much would operating income increase? (Round answer to o decimal places, e.g. 5,275.) Operating income $ Assume that variable costs increase to 47% of the current sales price and fixed costs increase by $10,000 per month. If Sandhill were to raise its sales price by 11% to cover these new costs, what would be the new annual breakeven point in sales dollars? (Round sales price to 2 decimal places, e.g. 52.75 and final answer to o decimal places, e.g. 5,275.) Breakeven sales $ Assume that variable costs increase to 47% of the current sales price and fixed costs increase by $10,000 per month. If Sandhill were to raise its sales price 11% to cover these new costs, but the number of blankets sold were to drop by 6%, what would be the new annual operating income? (Round sales price to 2 decimal places, e.g. 52.75 and final answer to o decimal places, e.g. 5,275.) The new annual operating income $ If variable costs and fixed costs were to change as in part (d), would Sandhill be better off raising its selling price and losing volume or keeping the selling price at $50 and selling 100,000 blankets? Sandhill is off to raise the sales price to $55.50 and sell fewer blankets. Click if you would like to Show Work for this question: Open Show Work
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