Fant Monograms sells stadium blankets monogrammed with high school and university emblems. The blankets retail for $40 throughout the country to loyal alumni of over 1,000 schools. Fant's variable costs are 30% of sales; fixed costs are $126,000 per month.

Required

1.What is Fant's annual breakeven point in sales dollars?(2 marks)

2.Fant currently sells 100,000 blankets per year. If sales volume were to increase by 15%, by how much would operating income increase? (2 marks)

Assume that variable costs increase to 45% of the current sales price and fixed costs increase by $10,000 per month. If Fant were to raise its sales price 10% to cover these new costs, but the number of blankets sold were to drop to 95,000, what would be the new annual operating income?