Question
Ivanhoe Monograms sells stadium blankets that have been monogrammed with high school and university emblems. The blankets retail for $45 throughout the country to loyal
Ivanhoe Monograms sells stadium blankets that have been monogrammed with high school and university emblems. The blankets retail for $45 throughout the country to loyal alumni of over 3,500 schools. Ivanhoes variable costs are 41% of sales; fixed costs are $118,000 per month.
Assume that variable costs increase to 45% of the current sales price and fixed costs increase by $13,400 per month. If Ivanhoe were to raise its sales price 11% to cover these new costs, but the number of blankets sold were to drop by 5%, what would be the new annual operating income?
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