Business, 05.05.2020 17:11, izabelllreyes

Breakeven analysis: Barry Carter is considering opening a music 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 music business?D) How much EBIT will Barry realize if he sells the minimum 2,000 CDs per month noted in part C?

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answered: aliami0306oyaj0n

Answer and Explanation:

The computation is shown below:

a. The operating break even point in number of CD is

= Fixed operating cost ÷ (Selling price per unit - variable operating cost)

= $73,500 ÷ ($13.98 - $10.48)

= 21,000 CDs

b. Now the total operating cost is

= Fixed cost + Quantity × variable cost per unit

= $73,500 + 21,000 CDs × $10.48

= $293,580

c. If he can sell 2,000 CDs per month than annual sale is 24,000 CDs and the break even is exceeded than 3,000 CDs by taking a difference of 24,000 CDs and 21,000 CDs . So, it should go to the CD business

d. Now the EBIT is

= (Selling price × Quantity) - Fixed cost - (Variable price × Quantity)

= ($13.98 × 24,000) - $73,500 - ($10.48 × 24,000)

= $335,520 - $73,500 - $251,520

= $10,500

We simply applied the above formulas

answered: Guest

1 all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know

answered: Guest

The business cycle is the periodic but irregular up-and-down movement in economic activity, measured by fluctuations in real gross domestic product (gdp) and other macroeconomic variables. a business cycle is typically characterized by four phases—recession, recovery, growth, and decline—that repeat themselves over time. economists note, however, that complete business cycles vary in length. the duration of business cycles can be anywhere from about two to twelve years, with most cycles averaging six years in length. some business analysts use the business cycle model and terminology to study and explain fluctuations in business inventory and other individual elements of corporate operations. but the term "business cycle" is still primarily associated with larger (industry-wide, regional, national, or even international) business trends.

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Breakeven analysis: Barry Carter is considering opening a music store. He wants to estimate the numb...