John Kyler is considering starting a web-based educational business, e-Prep 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; students would complete the course through self-study. Kyler 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, Kyler’s hard drive crashed before he finished his financial analysis. However, he did recover the following partial CVP chart:

Requirements

1. Label each axis, the sales revenue line, the total costs line, the fixed costs, the operating income area, and the breakeven point.

2. If Kyler attracts 300 students to take the course, will the venture be profitable?

3. What are the breakeven sales in students anddollars?

Transcribed Image Text:

70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 100 200 300 400 500 600 700