CVP Analysis Using Published Financial Statements

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

$20192018$Revenues$$125,843$ $$110,360$ Total cost of revenues and operating expenses$82,88475,302$ Operating income$$42,959$ $$35,058$

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$)=$ $Answer $1+$ $Answer $2$ X

where X is revenue in millions of dollars.

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

Note: Round amount to the nearest million dollar.

$Answer $3$ million

c$.$ Predict operating profit for $2020,$ assuming $2020$ sales of $$150,000$ million.

Note: Round amount to the nearest million dollar.

$Answer $4$ million