Pinnacle is a music distribution company which buys CDs from record companies to distribute to retailers. All
Fantastic news! We've Found the answer you've been seeking!
Question:
a) Produce a breakeven chart for Pinnacle.
b) As a result of increased pressure from illegal music downloads the average retail price of a CD has fallen. Pinnacle must now sell their CDs at £6.50. Display this change on your breakeven chart by drawing a 2nd line for revenue. The unit variable cost has not changed.
c) Explain the change in breakeven as a result of the fall in selling price.
d) Discuss - What other factors may influence the breakeven point for Pinnacle.
e) Calculate the margin of safety at the original price of £7, if the company sells 12,000 CD's
Related Book For
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen
Posted Date: