..ll Metro by T-Mobile . 7:34 PM @70 45% 4 You Be the Consultant Where Do We Break Even? Anita Dawson is doing some finan- cial planning for her small gift store. According to her budget for the up- coming year, Anita is expecting sales of S495.000. She estimates that the cost of goods sold will be $337,000, and other variable expenses will to- tal $42,750. Using the previous year as a guide, Anita anticipates fixed expenses of $78,100. Anita recalls a meeting she had re- cently with her accountant, who mentioned that her store already had passed its breakeven point eight and a half months into the year. She was pleased but really didn't know how the accountant had come up with that calculation. Now Anita is con- sidering expanding her store into a vacant building next door to her ex- isting location and taking on three new product lines. The company's cost structure would change, adding another $66,000 to fixed costs and $22.400 to variable expenses. Anita believes the expansion could gener- ate additional sales of $102.000 in the first year. She wonders what she should do. 1. Calculate Anita's breakeven point without the expansion plans. Draw a breakeven chart. 10 45% ..ll Metro by T-Mobile 7:34 PM { a Q W AA Anita recalls a meeting she had re- cently with her accountant, who mentioned that her store already had passed its breakeven point eight and a half months into the year. She was pleased but really didn't know how the accountant had come up with that calculation. Now Anita is con- sidering expanding her store into a vacant building next door to her ex- isting location and taking on three new product lines. The company's cost structure would change, adding another 566,000 to fixed costs and $22.400 to variable expenses. Anita believes the expansion could gener- ate additional sales of $102,000 in the first year. She wonders what she should do 1. Calculate Anita's breakeven point without the expansion plans. Draw a breakeven chart. 2. Compute the breakeven point. assuming that Anita decides to expand her business. 3. Do you recommend that Anita expand her business? Explain. ..ll Metro by T-Mobile . 7:34 PM @70 45% 4 You Be the Consultant Where Do We Break Even? Anita Dawson is doing some finan- cial planning for her small gift store. According to her budget for the up- coming year, Anita is expecting sales of S495.000. She estimates that the cost of goods sold will be $337,000, and other variable expenses will to- tal $42,750. Using the previous year as a guide, Anita anticipates fixed expenses of $78,100. Anita recalls a meeting she had re- cently with her accountant, who mentioned that her store already had passed its breakeven point eight and a half months into the year. She was pleased but really didn't know how the accountant had come up with that calculation. Now Anita is con- sidering expanding her store into a vacant building next door to her ex- isting location and taking on three new product lines. The company's cost structure would change, adding another $66,000 to fixed costs and $22.400 to variable expenses. Anita believes the expansion could gener- ate additional sales of $102.000 in the first year. She wonders what she should do. 1. Calculate Anita's breakeven point without the expansion plans. Draw a breakeven chart. 10 45% ..ll Metro by T-Mobile 7:34 PM { a Q W AA Anita recalls a meeting she had re- cently with her accountant, who mentioned that her store already had passed its breakeven point eight and a half months into the year. She was pleased but really didn't know how the accountant had come up with that calculation. Now Anita is con- sidering expanding her store into a vacant building next door to her ex- isting location and taking on three new product lines. The company's cost structure would change, adding another 566,000 to fixed costs and $22.400 to variable expenses. Anita believes the expansion could gener- ate additional sales of $102,000 in the first year. She wonders what she should do 1. Calculate Anita's breakeven point without the expansion plans. Draw a breakeven chart. 2. Compute the breakeven point. assuming that Anita decides to expand her business. 3. Do you recommend that Anita expand her business? Explain.