Gary Preston is evaluating a business opportunity to sell premium car wax at vintage car shows. The wax is sold in$64-$ounce tubs. Gary can buy the premium wax at a wholesale cost of $ $31$ per tub. He plans to sell the premium wax for $ $66$ per tub. He estimates fixed costs such as travel$$ costs, booth rental$$ cost$,$ and lodging to be $ $735$ per car show.

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Part $1$

Requirement $1.$ Determine the number of tubs Gary 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.

$($

Operating income

$+$

Fixed expenses

$)-$:

Contribution margin per unit

$=$

Sales in units

Part $2$

Gary must sell

tubs per show to breakeven.

Part $3$

Requirement $2$a$.$ Determine the sales volume in units necessary to earn the desired profit assuming Gary wants to earn a profit of $$$$1$ comma $015$ per show.

Gary must sell

tubs per show to earn a profit of $$1,015$ per show.

Part $4$

b$.$ Determine the sales volume in dollars necessary to earn the desired profit assuming Gary wants to earn a profit of $$$$1$ comma $015$ per show.

Begin by identifying the formula to compute the sales volume in dollars necessary to earn the desired profit.

$($

$+$

$)-$:

$=$

Breakeven sales in dollars

Part $5$

$($Do not round intermediary calculations. Round your answer to the nearest whole$$ dollar.$)$

Gary must achieve sales of

to earn a profit of $$1,015$ per show.

Part $6$

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

Condensed Income Statement

Less:

Less:

Net income $($loss$)$

Part $7$

Requirement $3.$ 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.

Begin by identifying the formula to compute the margin of safety in dollars.

$$

$=$

Margin of safety in dollars

Part $8$

The margin of safety in dollars is

$.$

Part $9$

Now identify the formula to compute the margin of safety in units

$$

$=$

Margin of safety in units

Part $10$

The margin of safety in units is

units.

Part $11$

Now identify the formula to compute the margin of safety as a percentage.

Margin of safety as a

$-$:

$=$

percentage of target sales

Part $12$

The margin of safety as a percentage of target sales is

$\%.$