Just For Me Investors is opening an office in Ann Arbor, Michigan. Fixed monthly expenses are office rent ($2,200), depreciation on office furniure (S320), utilities (S260), special telephone lines ($680), a subscription to an online brokerage service $710 and the salary o a financ al planner $4,830 Variable expenses include payments to the financial planner 12% o revenue advertising 4% o revenue supplies and postage 3% o revenue and usage ees or the elephone lines and computerized brokerage service (21% of revenue). Read the requirements Requirement 1. Compute the investment firm's breakeven revenue in dollars. If the average trade leads to $600 in revenue for Just For Me, how many trades must it make to breakeven? First identify the formula to calculate the breakeven point in dollars. Fixed expenses Operating income Contribution margin ratio Breakeven sales Just For Me Investors' breakeven revenue in dollars is S 15,000 25 trades to break even. Just For Me Investors must make Requirement 2. Compute dollar revenues needed to earn monthly operating income of $1,800 Begin by identifying the formula to compute the operating income. Sales revenue Variable expenses - Fixed expenses- Operating income The dollar revenues needed to earn monthly operating income of $1,800 is $ 18,000 Requirement 3. Graph Just For Me's CVP relationships. Assume that an average trade leads to S600 in revenue for the firm. Show the breakeven point, sales revenue line, foxed expense line, total expense line, operating loss area, operating income area, and sales in units (trades) and dollars when monthly operating income of $1,800 is earned. The graph should range from 0 to 40 units (trades) We will begin graphing the CVP relationships by first plotting the two points: breakeven point and the point where monthly operating income of $1,800 is earned. (Round amounts to be graphed to the nearest tenth of a thousand dollar, i.e. $7.250 would be $7.3. Enlarge the graph to medium size and use the point tool button displayed below to draw the graph.) 20 Click to enlarge 5 10 15 20 25 30 35 40 Unis (Trades Selected: Delete Clear none Requirements 1 1. Compute the investment firm's breakeven revenue in dollars. If the average trade leads to $600 in revenue for Just For Me, how many trades must it make to breakeven? Compute dollar revenues needed to earn monthly operating income of $1,800. Graph Just For Me's CVP relationships. Assume that an average trade leads to $600 in revenue for the firm. Show the breakeven point, sales revenue line, fixed expense line, total expense line, operating loss area, operating income area, and sales in units (trades) and dollars when monthly operating income of $1,800 is earned. The graph should range from 0 to 40 units (trades) Assume that the average revenue that Just For Me Investors earns decreases to $500 per trade How does this affect the breakeven point in number of trades? 2. 3. 4. Print Done
