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

Entrepreneurial Finance
6th Edition
ISBN:9781337635653
Author:Leach
Publisher:Leach
Chapter1: Introduction To Finance For Entrepreneurs
Section: Chapter Questions
Problem 6SEP
icon
Related questions
icon
Concept explainers
Question
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 vinta
cost of $29 per tub. He plans to sell the premium wax for $84 per tub. He estimates fixed
shows. The wax is sold in 64-ounce tubs. Marcus can buy the premium wax at a wholesale
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.
57 204
Transcribed Image Text: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 vinta cost of $29 per tub. He plans to sell the premium wax for $84 per tub. He estimates fixed shows. The wax is sold in 64-ounce tubs. Marcus can buy the premium wax at a wholesale 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. 57 204
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Cost volume profit (CVP) analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Entrepreneurial Finance
Entrepreneurial Finance
Finance
ISBN:
9781337635653
Author:
Leach
Publisher:
Cengage
Managerial Accounting: The Cornerstone of Busines…
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning