Barry Carter is considering opening a music store. He wants to estimate the number of CDs he

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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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Principles Of Managerial Finance

ISBN: 978-0136119463

13th Edition

Authors: Lawrence J. Gitman, Chad J. Zutter

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Question Posted: Mar 05, 2012 03:41 AM

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Barry Carter is considering opening a music store. He wants to estimate the number of CDs he

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a b Total operating costs FC Q VC Total operating costs 73500 21000 1048 Total operating ...View the full answer

Principles Of Managerial Finance

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