CVP Analysis Using Published Financial Statements

Condensed data in millions of dollars from Microsoft's $2019$ and $2018$ income statements follow:

Required

a$.$ Develop a profit equation for Microsoft's annual cost of revenues and operating expenses using revenues as the activity.

Note: Round fixed cost amount to the nearest whole million dollar.

Note: Round the variable cost ratio to two decimal places $($for example, round $0\mathrm{.}6555$ to $0\mathrm{.}66)$ in your answer below and in all calculations.

Total cost $($in millions$)\backslash (=\backslash$$ $\backslash )\backslash (+\backslash$$ $\backslash )$ X

where $\backslash ($ X $\backslash )$ is revenue in millions of dollars.

b$.$ Determine Microsoft's annual break$-$even point.

Note: Round amount to the nearest million dollar.

$!$ million

c$.$ Predict operating profit for $2020,$ assuming $2020$ sales of $\backslash (\backslash$$ $195,000\backslash )$ million.

Note: Round amount to the nearest million dollar.

$\backslash$$ million