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LO20-1, LO20-4 through Purple Cow operates a chain of drive-ins selling primarily ice cream products. The following infor- LO20-7 CASE 20.2 Evaluating Marketing Strategies mation is taken from the records of a typical drive-in now operated by the company Average selling price of ice cream per gallon .. . . . . . . . . . . . . . . . Number of gallons sold per month . . . . . . . . . . . . . . . . . . . . . . . . . $ 14.80 3,000 Variable costs per gallon $4.60 Total variable expenses per gallon $6.80 . . . . . . . . . . . . . . . . . . . . . . Fixed costs per month: $2,200.00 760.00 4,840.00 Manager's salary, including payroll taxes but 2,500.00 1,700.00 $12,000.00 Total fixed costs per month . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. Based on these data, the monthly break-even sales volume is determined as follows S12,000 (fixed costs) S8.00 (contribution margin per unit) = 1,500 gallons (or $22,200)
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