KevinKevin JohnsonJohnson is evaluating a business opportunity to sell premium c

ID: 2519835 • Letter: K

Question

KevinKevin

JohnsonJohnson

is evaluating a business opportunity to sell

premium car waxpremium car wax

at vintage car shows. The wax is sold in? 64-ounce tubs.

KevinKevin

can buy the

premium waxpremium wax

at a wholesale cost of

$ 32$32

per tub. He plans to sell the

premium waxpremium wax

for

$ 62$62

per tub. He estimates fixed costs such as travel? costs, booth rental? cost, and lodging to be

$ 600$600

per car show.Read therequirements

Requirement 1. Determine the number of tubs

KevinKevin

must sell per show to break even.

Begin by identifying the formula to compute the sales in units at various levels of operating income using the contribution margin approach.

(

Sales Per tubs = $62

Cost Per tubs = $32

Contribution Per tubs = $62 - $32 = $30

Fixed Cost = $600

Break even point in tubs = Fixed Cost / Contribution Per tubs

= $600 / $30

= 20 tubs

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.