Evan Donaldson is evaluating a business opportunity to sell premium car wax at vintage car shows. The wax is sold in $64-$ounce tubs. Evan can buy the premium wax at a wholesale cost of $$33$ per tub. He plans to sell the premium wax for $$73$ per tub. He estimates fixed costs such as travel costs, booth rental cost, and lodging to be $$720$ per car show.

Read the requirements.

Requirement $1.$ Determine the number of tubs Evan must sell per show to break even.

Begin by identifying the formula to compute the sales in units at various levels of operating income using the contribution margin approach.

Fixed expenses

Operating income

$1+$

Contribution margin per unit $=$

Sales in units

tubs per show to breakeven.

Requirements

Determine the number of tubs Evan must sell per show to break even.

Assume Evan wants to earn a profit of $$1,080$ per show.

a$.$ Determine the sales volume in units necessary to earn the desired profit.

b$.$ Determine the sales volume in dollars necessary to earn the desired profit.

c$.$ Using the contribution margin format, prepare an income statement $($condensed version$)$ to confirm your answers to parts a and $b.$

Determine the margin of safety between the sales volume at the breakeven point and the sales volume required to earn the desired profit. Determine the margin of safety in both sales dollars, units, and as a percentage.