Sports bags Inc. makes and sells backpacks for students. Financial projections for this line of products are revenue of $1 238 000, total variable costs of $841 840, and fixed costs of $218 000.
Answer each of the following independent questions.
(a) How much are the contribution margin and the contribution rate?
(b) How much of this product line does the business need to sell to break even?
(c) If the business was to save $56 000 in variable costs by offering fewer colours of backpacks, how much of this product line does the business need to sell to break even?
(d) If a specialized logo was printed on the backpacks, the variable costs would increase by 5%, and the fixed costs would increase by $15 000. If the price of the backpacks was then increased by 10%, what would be the resulting net income?