Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

need help please Greg Morrison recently graduated from mortuary school. He is considering opening his own funeral home. A funeral home is a high-fixed cost

need help please

Greg Morrison recently graduated from mortuary school. He is considering opening his own funeral home.

A funeral home is a high-fixed cost business, as it requires considerable expenditures for facilities, labor, and equipment, no matter how many families are served.

Assume the annual fixed cost of operations is $920,000. Further assume that the only significant variable cost relates to burial containers like urns and caskets. An average casket costs $1,350. Greg's banker has asked a variety of questions in contemplation of providing a loan for this business.

(a) If the average family is charged $6,600 for services and a burial container, how many families must

be served to clear the break-even point?

(b) If the banker believes Greg will only serve 110 families during the first year in business, how much

will the business lose during its first year of operation?

(c) If Greg believes his profits will be at least $120,000 during the first year, how much is he anticipating

for total revenue?

(d) The banker has suggested that Greg can reduce his fixed costs by $170,000 if he will not buy any

vehicles. Greg can instead rent vehicles as needed. The variable cost of renting is $800 per family

served. Will this suggestion help Greg reach the break-even point sooner?

A.

4(a) Breakeven Point in Families (unites)

175.36

4(b) Business lose for first year

-$342,600

4(c) Sales for a Target Income

$1,307,445

4(d) New Breakeven Point in Families (unites)

198.67

4(d) Does this approach reduce the breakeven point?

No

B.

4(a) Breakeven Point in Families (unites)

175.12

4(b) Business lose for first year

-$342,480

4(c) Sales for a Target Income

$2,307,319

4(d) New Breakeven Point in Families (unites)

168.12

4(d) Does this approach reduce the breakeven point?

No

C.

4(a) Breakeven Point in Families (unites)

175.87

4(b) Business lose for first year

-$62,545

4(c) Sales for a Target Income

$1,307,211

4(d) New Breakeven Point in Families (unites)

168.32

4(d) Does this approach reduce the breakeven point?

Does reduce

D.

4(a) Breakeven Point in Families (unites)

185.08

4(b) Business lose for first year

-$342,430

4(c) Sales for a Target Income

$1,307,465

4(d) New Breakeven Point in Families (unites)

168.98

4(d) Does this approach reduce the breakeven point?

Does reduce

E.

4(a) Breakeven Point in Families (unites)

175.24

4(b) Business lose for first year

-$342,500

4(c) Sales for a Target Income

$1,307,429

4(d) New Breakeven Point in Families (unites)

168.54

4(d) Does this approach reduce the breakeven point?

Does reduce

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

No Nonsense Project Auditing A Practical Guide For The PMO

Authors: Lisa Nash

1st Edition

0993403522, 978-0993403521

More Books

Students also viewed these Accounting questions

Question

Does it avoid using personal pronouns (such as I and me)?

Answered: 1 week ago

Question

Does it clearly identify what you have done and accomplished?

Answered: 1 week ago