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Unformatted text preview: ts. b. Label the x axis “Sales (units)” and the y axis “Costs/Revenues ($),” and then graph the firm’s sales revenue, total operating cost, and fixed operating cost functions on these axes. In addition, label the operating breakeven point and the areas of loss and profit (EBIT). LG1 11–4 Breakeven analysis Barry Carter is considering opening a record store. He wants to estimate the number of CDs he must sell to break even. The CDs will be sold for $13.98 each, variable operating costs are $10.48 per CD, and annual fixed operating costs are $73,500. a. Find the operating breakeven point in number of CDs. b. Calculate the total operating costs at the breakeven volume found in part a. c. 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 11–5 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 operat...
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This document was uploaded on 03/30/2014.

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