good morning I have been working on this question, following the steps and datab

Question

good morning I have been working on this question, following the steps and database tells me what is wrong, can I have help please?

Rainbow Paints operates a chain of retail paint stores. Although the paint is sold under the Rainbow label, it is purchased from an independent paint manufacturer. Guy Walker, president of Rainbow Paints, is studying the advisability of opening another store. His estimates of monthly costs for the proposed location are as follows. Fixed costs: Occupancy costs Salaries 3,168 3,640 1,200 Variable costs (including cost of paint) $ 6 per gallon Although Ralnbow stores sell several different types of paint, monthly sales revenue consistently averages $t0 per galion sold. Required: a. Compute the contribution margin ratlo and the break-even point in dollar sales and in gallons sold for the proposed store. c. Walker thinks that the proposed store will sell between 2.200 and 2.600 gallons of paint per month. Compute the amount of operating income that would be eamed per month at each of these sales volumes. a Contrbution margin ratio 40 % Break-even sales volume in dofiars 3.202 Break-evon sales volume in gafons Operating rcome for 2,200 Galions $22 Operating income tor 2 600 Gallons $26 cco 0 galion 000

Explanation / Answer

Sale price per gallon $10 Variable cost per gallon $6 Contribution margin per gallon $4 Contribution margin ratio = Contribution/ Sales Contribution margin ratio = $4 /10 Contribution margin ratio = 40% Fixed Costs: Occupancy costs       3,160 Salaries       3,640 Other       1,200 Total Fixed Costs       8,000 Break Even Point = Fixed Costs/ Contribution Per unit Breal Even Point = $8,000 /$4 Breal Even Point volume in gallons = 2,000 gallons Breal Even Point in dollar sales = 2,000 X$10 Breal Even Point in dollar sales = $ 20,000 Operating Income: 2200 gallons 2600 gallons Sales    22,000     26,000 Varaible costs    13,200     15,600 Contribution margin       8,800     10,400 Fixed Costs       8,000       8,000 Operating Income          800       2,400

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