Question
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
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 | $ | 148 | $ | 200 | ||||
| Variable cost per unit | (83 | ) | (90 | ) | ||||
| Contribution margin per unit | $ | 65 | $ | 110 | ||||
TBC expects to incur annual fixed costs of $776,000. The relative sales mix of the products is 80 percent for Nylon and 20 percent for Wool.
Required
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Determine the total number of products (units of Nylon and Wool combined) TBC must sell to earn a $112,000 profit.
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How many units each of Nylon and Wool blankets must TBC sell to earn a $112,000 profit?
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Prepare an income statement using the contribution margin format.
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Auditing Cases An Active Learning Approach
Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt
2nd Edition
9781266566899
