Personal For You Investors is opening an office in Ann Arbor, Michigan. Fixed monthly expenses are...
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Personal For You Investors is opening an office in Ann Arbor, Michigan. Fixed monthly expenses are office rent ($2,200), depreciation on office furniture ($320), utilities ($260), special telephone lines ($680), a subscription to an online brokerage service ($710), and the salary of a financial planner ($1,830). Variable expenses include payments to the financial planner (12% of revenue), advertising (4% of revenue), supplies and postage (3% of revenue), and usage fees for the telephone lines and computerized brokerage service (6% of revenue). Read the requirements. Requirement 1. Compute the investment firm's breakeven revenue in dollars. If the average trade leads to $500 in revenue for Personal For You, how many trades must it make to breakeven? First identify the formula to calculate the breakeven point in dollars. ( Fixed expenses + Operating income )/ Contribution margin ratio = Personal For You Investors' breakeven revenue in dollars is $ Personal For You Investors must make 8,000 trades to break even. Bre ven sales 1. Compute the investment firm's breakeven revenue in dollars. If the average trade leads to $500 in revenue for Personal For You, how many trades must it make to breakeven? 2. Compute dollar revenues needed to earn monthly operating income of $5,250. 3. Graph Personal For You's CVP relationships. Assume that an average trade leads to $500 in revenue for the firm. Show the breakeven point, sales revenue line, fixed expense line, total expense line, operating loss area, operating income area, and sales in units (trades) and dollars when monthly operating income of $5,250 is earned. The graph should range from 0 to 40 units (trades). 4. Assume that the average revenue that Personal For You Investors earns decreases to $400 per trade. How does this affect the breakeven point in number of trades? Personal For You Investors is opening an office in Ann Arbor, Michigan. Fixed monthly expenses are office rent ($2,200), depreciation on office furniture ($320), utilities ($260), special telephone lines ($680), a subscription to an online brokerage service ($710), and the salary of a financial planner ($1,830). Variable expenses include payments to the financial planner (12% of revenue), advertising (4% of revenue), supplies and postage (3% of revenue), and usage fees for the telephone lines and computerized brokerage service (6% of revenue). Read the requirements. Requirement 1. Compute the investment firm's breakeven revenue in dollars. If the average trade leads to $500 in revenue for Personal For You, how many trades must it make to breakeven? First identify the formula to calculate the breakeven point in dollars. ( Fixed expenses + Operating income )/ Contribution margin ratio = Personal For You Investors' breakeven revenue in dollars is $ Personal For You Investors must make 8,000 trades to break even. Bre ven sales 1. Compute the investment firm's breakeven revenue in dollars. If the average trade leads to $500 in revenue for Personal For You, how many trades must it make to breakeven? 2. Compute dollar revenues needed to earn monthly operating income of $5,250. 3. Graph Personal For You's CVP relationships. Assume that an average trade leads to $500 in revenue for the firm. Show the breakeven point, sales revenue line, fixed expense line, total expense line, operating loss area, operating income area, and sales in units (trades) and dollars when monthly operating income of $5,250 is earned. The graph should range from 0 to 40 units (trades). 4. Assume that the average revenue that Personal For You Investors earns decreases to $400 per trade. How does this affect the breakeven point in number of trades?
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1 Formula for breakeven point in dollars is Fixed expenses Operating income Contribution margin rati... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-0176223311
1st Canadian Edition
Authors: Karen Wilken Braun, Wendy Tietz, Walter Harrison, Rhonda Pyp
Posted Date:
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