Executives of Random Recordings, Inc., produced a digital album titled Sunshine/Moonshine by the Starshine Sisters Band.

(a). Using the price and cost information that follows, prepare a chart like that in Figure 13 –6 showing total cost, fixed cost, and total revenue for album quantity sold levels starting at 10 ,000 through 100,000, using intervals of 10 ,000 for quantity of albums sold (i.e.,10,000, 20 ,000, 30 ,000, and so on).

Fig 13-6

(b). What is the break-even point for the digital album?

Transcribed Image Text:

Quantity of Pictures Price per Sold (Q) 0 400 800 1,200 1,600 2,000 Picture (P) $120 $120 $120 $120 $120 $120 Total Revenue (TR= P x Q) $0 $48,000 $96,000 $144,000 $192,000 $240,000 Unit Variable Cost (UVC) $40 $40 $40 $40 $40 $40 Total Variable Cost (VC = UVC X Q) $0 $16,000 $32,000 $48,000 $64,000 $80,000 Fixed Cost (FC) $32,000 $32,000 $32,000 $32,000 $32,000 $32,000 Total Cost (TC = FC + VC) $32,000 $48,000 $64,000 $80,000 $96,000 $112,000 Profit (TR - TC) ($32,000) $0 $32,000 $64,000 $96,000 $128,000