Answer:
contribution margin of nylon blankets = $64
contribution margin of wool blankets = $120
annual fixed costs = $743,000
sales mix = 75% nylon blankets, 25% wool blankets
weighted contribution margin = ($64 x 75%) + ($120 x 25%) = $78
if TBC wants ot make $115,000 in profits it must sell:
= ($743,000 + $115,000) / $78 = 11,000 units
TBC must sell 2,750 wool blankets and 8,250 nylon blankets.
The Blanket Company (TBC)
Income Statement
Sales revenue $1,804,000
Variable costs <u>($946,000)</u>
Contribution margin $858,000
Fixed costs <u>($743,000)</u>
Operating income $115,000
