Rainbow Paints operates a chain to retail paint stores. Although the paint is sold under the Rainbow label, it is purchased from

Question

3 years ago

7

Rainbow Paints operates a chain to 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:
Fixed costs:
Occupancy costs $ 3,160
Salaries 3,640
Other 1,200
Variable costs (including cost of paint) $ 6 per gallon
Although Rainbow stores sell several different types of paint, monthly sales revenue consistency averages $10 per gallon sold
Required:
a. 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 earned per month at each of these sales volumes.

Business