Question Two Gripright, Inc. is launching as a one product company. The company manufactures the "SealBreaker"-a rubber device used to open even the toughest of jars. The proposed unit selling price and expected unit variable cost per Sealbreaker are as follows: Selling Price per Sealbreaker Unit Variable Manufacturing Cost Unit Contribution Margin $ $ 8.00 3.00 5.00 The company is about to attend a trade show for kitchen supplies and the organizer of this trade show has given Gripright, Inc. the following three options to pay for its booth fee. Payment Option One Fixed Booth Fee 4,000 Commission (as % of revenues) 0% D Payment Option Two Fixed Booth Fee 3,600 2 Commission (as % of revenues) 10% 3 Payment Option Three 4 Fixed Booth Fee $ 3,200 5 Commission (as % of revenues) 20% 6 Requirement One Determine Gripright's breakeven point if the company chooses payment option one. Hint: The 7 booth fee is a fixed cost while the commission charge is variable. 18 Selling Price per Unit 19 Variable Costs per Unit 20 Unit Variable Manufacturing Cost 3.00 21 Unit Commission Expense 22 Total Unit Variable Cost 23 Unit Contribution Margin 24 25 26 Fixed Costs Breakeven in Units 27 Add: Target Operating Income 28 Total Required Contribution Margin 29 Divide by: Average Unit CM 30 Required Sales Volume $ 8.00 3.00 5.00