Unformatted text preview: . If Barry estimates that at a minimum he can sell 2,000 CDs per month,
should he go into the record business?
d. How much EBIT will Barry realize if he sells the minimum 2,000 CDs per
month noted in part c? LG1 12–5 Breakeven point—Changing costs/revenues JWG Company publishes Creative
Crosswords. Last year the book of puzzles sold for $10 with variable operating
cost per book of $8 and fixed operating costs of $40,000. How many books
must JWG sell this year to achieve the breakeven point for the stated operating
costs, given the following different circumstances?
a. All figures remain the same as last year.
b. Fixed operating costs increase to $44,000; all other figures remain the same.
c. The selling price increases to $10.50; all costs remain the same as last year.
d. Variable operating cost per book increases to $8.50; all other figures remain
e. What conclusions about the operating breakeven point can be drawn from
your answers? CHAPTER 12 Leverage and Capital Structure 547...
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