Assume that variable costs increase to 46% of the current sales price and fixed costs increase by $14,200 per month. If Wildhorse were to raise its sales price 10% to cover these new costs, but the number of blankets sold was to drop by 6%, what would be the new annual operating income?

Opeating income will be in the magnitude of $1,809,555‬ after these changes

Missing Information:

Sales Price $49

Fixed costs are $120,000 per month.

Sales volume 125,000

Explanation:

49.0 x 1.1           = 53.9 new sales price

53.9 x (1 - 0.46) = 29.106 new contribution

(120,000 + 14,200) x 12 =  1,610,400 new fixed cost

sales volume: 125,000 * ( 1 - 0.06) = 117,500

Operating income

117,500 x 29.106 - 1,610,400 = 1,809,555‬

a. $48.75

is the answer to your question

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