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Gary Juda is evaluating a business opportunity to sell premium car wax at vintage car shows. The wax is sold in 64-ounce tubs. Gary can buy the premium wax at a wholesale cost of $32 per tub. He plans to sell the premium wax for $62 per tub. He estimates fixed costs such as travel costs, booth rental cost, and lodging to be $600 per car show. Read the requirements. Requirement 1. Determine the number of tubs Gary 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 in units Gary must sell tubs per show to breakeven. Requirement 2a. Determine the sales volume in units necessary to earn the desired profit assuming Gary wants to earn a profit of $900 per show. Gary must sell tubs per show to earn a profit of $900 per show. b. Determine the sales volume in dollars necessary to earn the desired profit assuming Gary wants to earn a profit of 900 per show. Begin by identifying the formula to compute the sales volume in dollars necessary to earn the desired profit. = Target sales in dollars Gary must achieve sales of earn a profit of $900 show. c. Using the contribution margin format, prepare an income statement (condensed version) to confirm your answers to parts a and b. Condensed Income Statement Less Less: Net income (loss) Requirement 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. Begin by identifying the formula to compute the margin of safety in dollars. Margin of safety in dollars The margin of safety in dollars is Now identify the formula to compute the margin of safety in units = Margin of safety in units The margin of safety in units is units. Now identify the formula to compute the margin of safety as a percentage. Margin of safety as a percentage of target sales The margin of safety as a percentage of target sales is %

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