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# Swift Start is a gas tank additive guaranteed to put a "tiger in your tank", as Exxon commercials once

boasted. Its production has the following fixed and variable costs. It is priced at \$5.00 per gallon to begin with:

Fixed costs (per year)                           Variable Costs per gallon

Rent                            \$12000                       Volatile Fluids  \$1.00

Utilities                          1800            Mfg. Labor                      .10

Computer services        19200            Packaging                     .15

Other fixed expense        1080            Inert ingredients               .50

Total fixed        \$50880                        Total                \$2.00

1. What is the annual breakeven production quantity (use above data, show work)?

1. What revenue would the sale of the breakeven quantity for \$5 per gallon generate?

1. How many gallons (at \$5 each) must be sold to earn \$100000 above breakeven? (show your calculations)

1. Management believes that only 25000 gallons can be sold in a year. What price per gallon needs to be charged to pay the fixed costs and earn \$100000 more (variable costs remain as initially given)(show your work)?

1. What is the Contribution Margin Ratio (CMR) if the price per gallon is \$7.00

i)breakeven point quantity=16,960 units ii)Revenue for breakeven quantity=\$84,800... View the full answer

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