35 Instructions What unique reasons would you give each of these individuals to motivate them to come to your seminar CASE 20.2 Evaluating Marketing Strategies 1020-1020-4L020-5, L020-6. L020-7 Purple Cow operates a chain of drive ins selling primarily ice cream products. The following information is taken from the records of a typical drive in now operated by the company Average selling price of ice cream per gallon 14.80 Number of gallons sold per month 3.000 Variable costs per gallon: Ice cream $4.60 Supplies (cups. concs, toppings, etc.) 2.20 Total variable expenses per gallon $ 6.80 Fixed costs per month Rent on building $ 2,200.00 Utilities and upkeep 760.00 Wages, including payroll taxes 4,840,00 Manager's salary, including payroll taxes but excluding any bonus 2,500.00 Other fixed expenses 1.700.00 Total fixed costs per month $12,000.00 . Based on these data, the monthly break-even sales volume is determined as follows. $12,000 (ted costs) $8.00 contribution margin per unit) = 1.500 gallons er (522.200) Instructions a. Currently, all store managers have contracts calling for a bonus of 20 cents per gallon for each gallon sold beyond the break even point. Compute the number of gallons of ice cream that must be sold per month in order to earn a monthly operating income of $10,000 (round to the nearest gallon) 1. To increase operating income, the company is considering the following two alternatives: 1. Reduce the selling price by an average of $2.00 per gallon. This action is expected to increase the number of gallons sold by 20 percent. (Under this plan, the manager would be paid a salary of $2,500 per month without a bonus.) 2. Spend $3,000 per month on advertising without any change in selling price. This action is expected to increase the number of gallons sold by 10 percent. (Under this plan, the manager would be paid a salary of $2,500 per month without a bonus) Which of these two alternatives would result in the higher monthly operating income? How many Page 926 gallons must be sold per month under cach alternative for a typical outlet to break even? Provide schedules in support of your answers LO 107