Planning Specialists Investors is opening an office in Newark, New Jersey. Fixed monthly expenses are office rent ($2,200), depreciation on office furniture ($320), utilities ($260), special telephone lines ($680), a subscription to an online brokerage service ($710), and the salary of a financial planner ($1,830). Variable expenses include payments to the financial planner (12% of revenue), advertising (4% of revenue), supplies and postage (3% of revenue), and usage fees for the telephone lines and computerized brokerage service (6% of revenue). Read the requirements. Requirement 1. Compute the investment firm's breakeven revenue in dollars. If the average trade leads to $500 in revenue for Planning Specialists, 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 Planning Specialists Investors' breakeven revenue in dollars is $ 8,000 Planning Specialists Investors must make 16 trades to break even. Requirement 2. Compute dollar revenues needed to earn monthly operating income of $5,250. 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 $5,250 is $ 15,000 . Requirement 3. Graph Planning Specialists's CVP relationships. Assume that an average trade leads to $500 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 $5,250 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 $5,250 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.) proting the one per te bereike n point and the point where monthly Dollars (Thousands) L ILIT 0- TITTTT 0 5 10 15 20 25 30 Units (Trades) 35 40 Click to enlarge graph Compute the investment firm's breakeven revenue in dollars. If the average trade leads to $500 in revenue for Planning Specialists, how many trades must it make to breakeven? 2. Compute dollar revenues needed to earn monthly operating income of $5,250. Graph Planning Specialists's CVP relationships. Assume that an average trade leads to $500 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 $5,250 is earned. The graph should range from 0 to 40 units (trades). 4. Assume that the average revenue that Planning Specialists Investors earns decreases to $400 per trade. How does this affect the breakeven point in number of trades
