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SwiftyShop Is a Gas Station That Sells 3 Types of Fuel

Question 140

Essay

SwiftyShop is a gas station that sells 3 types of fuel: Regular Unleaded, Diesel, and Ethanol. The sales mix among the 3 fuel types remains relatively stable. SwiftyShop recorded the following data for the most recent month:
Regular ($2.48/gallon average price): Sold 7,000 gallons, $1.23 cost/gallon
Diesel ($2.39/gallon average price): Sold 15,000 gallons, $1.59 cost/gallon
Ethanol ($1.59/gallon average price): Sold 3,000 gallons, $1.09 cost /gallon
SwiftyShop's fixed expenses are $15,600 / month. SwiftyShop's tax rate is 20%.
If SwiftyShop wants to generate after-tax net income of $14,000 next month, how many gallons of Ethanol will it need to sell? (Round unit contribution margins to the nearest cent. For both intermediate and final calculations, round the number of units up to the next full unit).

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