Question
Josh Ward is a young entrepreneur preparing to start a company that will sell floating lounge chairs for use in private pools. As part of
Josh Ward is a young entrepreneur preparing to start a company that will sell floating lounge chairs for use in private pools. As part of a loan package, the bank has asked him to prepare a business plan that includes a break-even analysis. The lounge chairs will sell for $64 each and variable costs per unit are expected to be $24. Josh anticipates incurring $600,000 in fixed costs per year. Required
Based on his projections, how many lounge chairs must Josh sell to break even? If Josh wants to generate an annual operating income of $54,000, how many lounge chairs must he sell? Assuming the companys tax rate is 25%, how many lounge chairs must the company sell to generate an annual net income of $64,500?
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