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Multiple-Level Break-Even Analysis Nielsen Associates provides marketing services for a number of small manufacturing firms. Nielsen receives a commission of 10 percent of sales. Operating
Multiple-Level Break-Even Analysis Nielsen Associates provides marketing services for a number of small manufacturing firms. Nielsen receives a commission of 10 percent of sales. Operating costs are as follows: Unit-level costs $0.02 per sales dollar Sales-level costs $100 per sales order Customer-level costs $800 per customer per year Facility-level costs $60,000 per year (a) Determine the minimum order size in sales dollars for Nielsen to break even on an order. $ 1,250 (b) Assuming an average customer places four orders per year, determine the minimum annual sales required to break even on a customer. $ 16,250 x (c) What is the average order size in (b)? $ 3,250 X (d) Assuming Nielsen currently serves 100 customers, with each placing an average of four orders per year, determine the minimum annual sales required to break even. $ 2,375,000 X (e) What is the average order size in (d)? $ 4,750 X
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