Question
Peter is thinking of starting up a Personal Financial Services consultation in his spare time. The basic office equipment will cost $1960, and the
Peter is thinking of starting up a "Personal Financial Services" consultation in his spare time. The basic office equipment will cost $1960, and the variable cost (VC) for each consultation is estimated to be $17.70. He plans to bill each client $64.50 per consultation. (a) What is the break-even quantity of consultations for Peter's "Personal Financial Services" operation? (b) If Peter's profit goal is $1500, how many consultations would he need to reach his goal? (c) Briefly explain the concept of a "Contribution Margin," and demonstrate how the Contribution Margin (CM) determined from the information above can be used to determine the same break-even quantity determined in part (a). (a) What is the break-even quantity of consultations for Peter's "Personal Financial Services" operation? Peter has to make 42 consultations to break even. (Round to the nearest integer as needed.) (b) If Peter's profit goal is $1500, how many consultations would he need to reach his goal? To make a $1500 profit, Peter needs to make 74 consultations. (Round to the nearest integer as needed.) (c) Briefly explain the concept of a "Contribution Margin," and demonstrate how the Contribution Margin (CM) determined from the information above can be used to determine the same break-even quantity determined in part (a). The contribution margin is the the fixed cost, $ per unit minus the be found by , and the contribution margin, $ (Type integers or decimals rounded to the nearest cent as needed.) per unit. The break-even quantity can
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