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Please do the required along with the CVP analysis. Quench Their Thirst (QTT) is a not-for-profit organization located in Vancouver. It makes and sells bottled
Please do the required along with the CVP analysis.
Quench Their Thirst (QTT) is a not-for-profit organization located in Vancouver. It makes and sells bottled water, and for every bottle sold, it puts $0.25 toward providing clean drinking water to those in need. QTT works with another not-for-profit organization, Clean Water Aid (CWA), whose mission is to provide clean drinking water. Once CWA identifies an area of significant need, there are various ways that it provides aid. For example, in some cases, it donates or purchases equipment that will clean the water to be safe for consumption. In other cases, CWA ships water directly to the identified areas. CWA provides a detailed audited report annually of the aid provided to various affected areas. Once a year, the founder of CWA travels to the areas that have received support to ensure that the resources are being used effectively. QTT has been in operation for just over a year. The two founders, Alex and Yim-Ling Huang, have been married for just over three years. In order be able to devote themselves full-time to QTT, they live in Alex's parents' basement. His parents are very generous and do not require any rent payments, but the couple is considering moving out soon. However, in order to do so, they will need to start to take more salary out of QTT. As it stands right now, the couple is paid a combined salary of $25,000 from QTT, which is the maximum amount of cash that is available for withdrawal. Alex and Yim-Ling are wondering by how much they would have to increase sales in order to be able to withdraw a combined salary of $80,000. As they sat down to discuss whether it is feasible, they realized that they aren't even sure how many bottles of water they sold this year! The only thing they know is that, for every bottle of water they sell as a single bottle, they sell two cases of 24 bottles of water. In order to get some help, Alex and Yim-Ling have asked for your assistance. You are a new Certified Professional Accountant and have agreed to act as a treasurer on the QTT's board of directors. In order to help Alex and Yim-Ling with their request, you have asked them to provide you with a detailed list of their revenues and expenses (which they provided in Exhibit 1). In addition, Alex mentioned to you that the variable costs associated with packaging a 24-bottle case are $0.07. In addition to selling water bottles, Alex and Yim-Ling have considered selling merchandise to promote QTT. Many customers are excited about the organization because they feel they are helping those in need with every purchase they make. Alex and YimLing have done some research with respect to selling T-shirts and have provided their preliminary research in Exhibit 2. Required Write a report responding to the couple's questions. If they decide to pursue the sale of T-shirts, how many bottles of water, cases of water, and T-shirts would they have to sell to achieve the desired level of salary? Yim-Ling stated that she felt that for every water bottle they sold, they could sell 10T-shirts. They would like your report to comment on two scenarios: one that includes the sale of T-shirts and one that does not. EXHIBIT 1 - SUMMARY OF REVENUE AND EXPENSES EXHIBIT 2 - ALEX AND YIM-LING'S NOTES REGARDING T-SHIRT SALESStep by Step Solution
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