Question 1:

Jordan Company produces a product that has a variable cost of $28 per unit and a sales price of $60 per unit. The companys annual fixed costs total $810,000. It had net income of $370,000 in the previous year. In an effort to increase the companys market share, management is considering lowering the selling price to $53 per unit.

Required

1. If Jordan desires to maintain net income of $370,000, how many additional units must it sell to justify the price decline?

2. Assume that in addition to lowering its selling price to $53, Jordan also desires to increase its net income by $80,000. Determine the number of units the company must sell to earn the desired income.

Question 2:

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.

	Nylon				Wool
Sales price	$	140			$	192
Variable cost per unit		(70	)			(87	)
Contribution margin per unit	$	70			$	105

TBC expects to incur annual fixed costs of $666,000. The relative sales mix of the products is 80 percent for Nylon and 20 percent for Wool.

Required

1. Determine the total number of products (units of Nylon and Wool combined) TBC must sell to earn a $104,000 profit.

2. How many units each of Nylon and Wool blankets must TBC sell to earn a $104,000 profit?

3. Prepare an income statement using the contribution margin format.

Thank you, please explain how to solve.