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Operating income + Fixed expenses Marcus Allen is evaluating a business opportunity to sell premium car waxat vintage car shows. The wax is sold in
Operating income Fixed expenses
Marcus Allen is evaluating a business opportunity to sell premium car waxat vintage car shows. The wax is sold in 64-ounce tubs. Marcus can buy the premium wax ata wholesale cost of $29 per tub. He plans to sell the premium wax for $84 per tub. He estimates fixed costs such as travel costs, booth rental cost, and lodging to be $880 per car show Read the reguirements. Requirement 1. Determine the number of tubs Marcus must sell per show to break even. Begin by dentifying 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 Marcus must sell 16 tubs per show to breakeven. Requirement 2a. Determine the sales volume in units necessary to earn the desired profit assuming Marcus wants to eam a profit of $1 ,320 per show. Marcus must sell 40 tubs per show to eam a profit of Sl ,320 per show. Requirements b. Determine the sales volume in dollars necessary to earn the desired profit assuming Marcus wants to earn a profit of $1,320 per show. Begin by dentifying the formula to compute the sales volume in dollars necessary to eam the desired profit. ( Operating income Fixed expenses ) Contribution margin ratio Breakeven sales in dollars (Do not round intermediary calculations. Round your answer to the nearest whole dollar.) Marcus must achieve sales of $ 3,360 to earn a profit of $1 ,320 per show. c. Using the contribution margin format, prepare an income statement (condensed version) to confirm your answers to parts a and b. Condensed Income Statement 2. 3. Determine the number of tubs Marcus must sell per show to break even. Assume Marcus wants to eam a profit of Sl ,320 per show. a. Determine the sales volume in units necessary to eam the desired profit. b. Determine the sales volume in dollars necessary to eam 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 eam the desired profit. Determine the margin of safety in both sales dollars, units, and as a percentage. Sales Less: Variable costs Contribution margin Less: Fixed costs Net income (loss) $ 3,360 1,160 2,200 880 $ 1,320 print Done Requirement 3. Determine the margin of safety between the sales volume at the breakeven point and the sales volume required to eam the desired profit. Determine the margin of safety in both sales dollars, units, and as a percentage. Begin by dentifying the formula to compute the margin of safety in dollars. Target sales in dollars The margin of safety in dollars is Breakeven sales in dollars $ 2,016 Now identify the formula to compute the margin of safety in units Target sales in units The margin of safety in units is Breakeven sales in units 24 units. Now identify the formula to compute the margin of safety as a percentage. Margin of safety in dollars Target sales in dollars Margin of safety in dollars Margin of safety in units Margin of safety as a percentage of target sales The margin of safety as a percentage of target sales is
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