Question

04104/mi/508051632ctfi =%264%2F2%5BP70010131730000000000000000064149650%2F14658P70010131730000000000000000065A05D%2F4658P70010232730000000000000 3. If the company's expected sales were 500 candles instead of the projection listed in the exercise, which lease options would be more favorable for the company? Why? E7-37A Comprehensive CVP analysis (Learning Objectives 1. 2. 3. 4. & 5) Marcus Allen is evaluating a business opportunity to sell premium car wax at vintage car shows. The wax is sold in 64-ounce tubs. Marcus can buy the premium wax at a 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. Requirements 1. Determine the number of tubs Marcus must sell per show to break even. 2. Assume Marcus wants to earn a profit of $1,320 per show. a. Determine the sales volume in units necessary to earn the desired profit. b. Determine the sales volume in dollars necessary to earn the desired profit. c. Using the contribution margin format, prepare an income statement (condensed version) to confirm your answers to parts a and b. 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 E7-38A Comprehensive CVP analysis (Learning Objectives 1. 2. 3. 4. & 5) Dubu Companu manufactures and sells a single nroduct. The company's sales and expenses for last

Answer 1

Answer - Selling price per tub = $84 Variable cost per tub$ 29 contribution margin per tubes = $550 Fixed cost = $880 0 Break even point - Fixed cost contribution margin pertub $880 $55 Break even point = 16 tubs Fixed cost + desired profil @ sales volume in uniks to earn the desired profit contribution margin per tub $880 + $ 1320 $55 $2200 - = 40 tubs (9 sales volume in dollars to earn desired profit fixed cost + desired profit contribution margin ratio red profit contribution margin per tub y loo contribution margin raltro = selling price per tub $55 xcoo $ 84 = 65.48

.: sales volume in dollars - $880+ $1320 Grete 65.48611 i =$3360. Income Statement- sales = $3360 les variable cost - (1160) (40 tubsX $29) contribution margin = $2200 = (880) less's Pined cost = $1320 g. proto Profit

Profit Margin of safety in dollars = contribution margin ratio $ 1320 65.48 = $2016 Profit Margin of safety in units = contribution margin pertub $1320 $55 = 24 tubs. desired sales- Breakeven sales sales of safety percentage (•) = Coin destred margim = 40-16 xloo ५० • 24 XCoo 40 - 60'. Thanks