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…

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

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

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter4: Extent (how Much) Decisions

Section: Chapter Questions

Problem 4.2IP

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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. 1. 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 What is the annual breakeven production quantity (use above data, show work)? 2. What revenue would the sale of the breakeven quantity for $5.50 per gallon generate? 3. The production department says 29000 gallons is its maximum production capability. Management insists on earning $94400 above fixed costs. All costs are as given initially. What price must be charged per gallon if only 29000…
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