draw

Rainbow Paints operates a chain of retuil paint stores. Although the paint is sold under the Rain bow label, it is purchased from an independent paint manufacturer. Guy Walker, president of Rain- bow Paints. is studying the advisability of opening another store. His estimates of monthly costs for the proposed location are: Fixed costs Occupancy costs 3,160 3.640 1.200 S6 per gallon Other Variable costs (including cost of paint) Although Rainbow stores se!l several different types of paint, monthly sales revenue consistently SI0 per gallon sold. averages Instructions a. Compute the contribution margin ratio and the break-even point in dollar sales and in gallons b. Draw a monthly cost-volume-protit graph for the proposed store. assuming 3.000 gallons per sold for the proposed store. month as the maximum sales potential Walker thinks that the proposed store w ill sell between 2.200 and 2.600 galons ot puint per month. Compute the amount of operating income that would be earned per month at each of c. these sales volumes