Joseph Maksoud is considering starting a web-based educational business, ePrep MBA. He plans to offer a short-course review of accounting for students entering MBA programs. The materials would be available on a password-protected website, and students would complete the course through self-study. Maksoud would have to grade the course assignments, but most of the work is in developing the course materials, setting up the site, and marketing. Unfortunately, Maksoud€™s hard drive crashed before he finished his financial analysis.
However, he did recover the following partial CVP chart:

Requirements
1. Label each axis, sales revenue line, total expense line, fixed expense line, operating income area, and operating loss area.
2. If Maksoud attracts 400 students to take the course, will the venture be profitable?
3. What are the break-even sales in students and dollars?

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70,000 - 60,000 50,000 40,000 30,000 20,000 0,000 0 100 200 300 400 500 600 700