# Ivanhoe Monograms sells stadium blankets that have been monogrammed with high school and...

## 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 alumni of over 3,500 schools. Ivanhoe's variable costs are 41% of sales; fixed costs are $118,000 per month. Ivanhoe currently sells 130,000 blankets per year. If sales volume were to increase by 16%, by how much would operate income increase? (Round answer to 0 decimal places, e.g. 5,275.)

## Contribution Margin:

To find the contribution margin of a product, the variable costs are subtracted from the sales price. This margin determines what amount of sales is available for fixed costs and operating income.

## Answer and Explanation: 1

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View this answerWe begin by finding the contribution margin ratio of each blanket:

- 100% - 41% = 59%

We multiply this by the sales price to find the contribution...

See full answer below.

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Chapter 22 / Lesson 20Understand what the contribution margin is. Learn the definition of contribution margin and understand its importance in business. Discover how to calculate it through examples.

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