Question

Blissful Blankets hopes to achieve a profit this year of $520,000. Each blanket has a contribution margin of $21. Fixed costs for the company are $320,000. How many blankets does Blissful Blankets need to sell in order to achieve its target profit?

Answer 1

Blissful Blankets must sell 40,000 blankets to reach a profit of $520,000 considering a $21 contribution margin and $320,000 in fixed costs.

Step-by-step explanation:

To determine how many blankets Blissful Blankets needs to sell to achieve a profit of $520,000, you can use the formula for calculating the breakeven point in units and then adjust for the desired profit level.

The formula is (Fixed Costs + Desired Profit) / Contribution Margin per Unit.

Here, the fixed costs are $320,000, the desired profit is $520,000, and the contribution margin per unit is $21.

Plugging in the values gives us ($320,000 + $520,000) / $21 = 40,000 blankets.

Therefore, Blissful Blankets needs to sell 40,000 blankets to achieve a profit of $520,000.