Identify information on a CVP graph (Learning Objective 2)

Chad Brown 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 pro¬ grams. The materials would be available on a password-protected Web site, and stu¬ dents would complete the course through self-study. Brown 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, Brown’s hard drive crashed before he fin¬ ished 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, operat¬ ing income area, and operating loss area.
2. If Brown attracts 400 students to take the course, will the venture be profitable?
3. What are the breakeven sales in students and dollars?

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