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 | $ | 136 | $ | 188 | ||||
Variable cost per unit | (76 | ) | (88 | ) | ||||
Contribution margin per unit | $ | 60 | $ | 100 | ||||
TBC expects to incur annual fixed costs of $716,000. The relative sales mix of the products is 80 percent for Nylon and 20 percent for Wool.
Required
-
Determine the total number of products (units of Nylon and Wool combined) TBC must sell to earn a $100,000 profit.
-
How many units each of Nylon and Wool blankets must TBC sell to earn a $100,000 profit?
-
Prepare an income statement using the contribution margin format.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started