EMERGENCY! Production just informed management that one of its five glycol squeezers has been destroyed by a rogue computer virus. Production capability is now only 23000 gallons at most. The squeezer cannot be fixed and IceLess cannot afford a replacement. This breakdown will NOT lower fixed costs. This breakdown will not change variable cost per unit, either. If only 23000 gallons are produced, and the earning target remains $94400 above fixed costs, what price per gallon must now be charged? (show your calculationsWhat is the Contribution Margin Ratio (CMR) if the price is $8.82 per gallon?At a price of $10.95 per gallon, what will be the DOL (assume 23000 gallons are sold , that $94400 above fixed costs is to be earned, and that other costs are as initially given)(show your calculations). IceLess is an anti-icing solution sold in gallon plastic jugs. It is poured into the windshield washer bottleof your car. Wash your windshield and the solution prevents the glass from icing over for about fourhours. Production incurs the following fixed and variable costs. It is priced initially at $5.50 per gallon.Fixed costs (per year)RentUtilitiesManagerial salariesFlammability permitOther fixed expenseTotal fixed$180001320020000120002400$65600Variable Costs per gallonGlycolFreezeFree 312Mfg laborPackagingInert ingredientsAdvertisingTotal$1.50.50.20.20.60.30$3.30

The value of a business's revenues less its variable costs, stated as a percentage, is its…

Answered: EMERGENCY! Production just informed…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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EMERGENCY! Production just informed management that one of its five glycol squeezers has been destroyed by a rogue computer virus. Production capability is now only 23000 gallons at most. The squeezer cannot be fixed and IceLess cannot afford a replacement. This breakdown will NOT lower fixed costs. This breakdown will not change variable cost per unit, either. If only 23000 gallons are produced, and the earning target remains $94400 above fixed costs, what price per gallon must now be charged? (show your calculations
What is the Contribution Margin Ratio (CMR) if the price is $8.82 per gallon?
At a price of $10.95 per gallon, what will be the DOL (assume 23000 gallons are sold , that $94400 above fixed costs is to be earned, and that other costs are as initially given)(show your calculations).

IceLess is an anti-icing solution sold in gallon plastic jugs. It is poured into the windshield washer bottle
of your car. Wash your windshield and the solution prevents the glass from icing over for about four
hours. Production incurs the following fixed and variable costs. It is priced initially at $5.50 per gallon.
Fixed costs (per year)
Rent
Utilities
Managerial salaries
Flammability permit
Other fixed expense
Total fixed
$18000
13200
20000
12000
2400
$65600
Variable Costs per gallon
Glycol
FreezeFree 312
Mfg labor
Packaging
Inert ingredients
Advertising
Total
$1.50
.50
.20
.20
.60
.30
$3.30

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