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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
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.
- Spring '14