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Swift Start is a gas tank additive guaranteed to put a pink tiger in your tank, as Fina once advertised. Production of the additive has
Swift Start is a gas tank additive guaranteed to put a "pink tiger in your tank", as Fina once advertised. Production of the additive has the following fixed and variable costs. It is priced at $7.00 per gallon to start. Show your work and calculations: Fixed costs (per year) Variable Costs per gallon Rent $15000 Manufacturing Labor $ .50 Utilities 12000 Packaging 25 Managerial salaries 150000 Advertising .75 Vehicle Leases 60000 Secret Chemicals 1.25 Computer services 24000 Inert ingredients 1.00 Insurance Premiums 6000 Selling costs 50 Other fixed expense 4000 Total fixed $271000 Total $4.25 1. How many gallons must be produced annually to breakeven if each gallon sells for $7.00. 2. What revenue would the sale of the breakeven quantity for $7 per gallon generate? 3. How many gallons (selling for $7 each) must be sold to earn $100000 more than the $271000 of fixed costs? 4. What is the contribution margin ratio (CMR) if the selling price is $7.00 per gallon? 5. Marketing believes only 120000 gallons per year can be sold. What price per gallon should be charged to cover fixed costs plus earn $100000 more? Variable costs are the same as initially. 6. If a price of $8.00 per gallon is charged, it is still desired to earn $100000 above fixed costs, and only 120000 gallons are sold, what will the DOL be
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