Ron's Break-even Analysis: Ron Ross works for a major chair retailer for the past 15 years. Opening his own chair retail outlet has crossed his mind many times for many years. Four months ago, Ron visited his bank and communicated his intentions of owning his own business to a loan manager. The manager told him to "prepare a business plan & be sure to include annual forecasted financial statements for a 3-year period". And he wanted Ron to present answers to the following five questions at their next meeting. 1. What will your selling price per chair be for each of the three years? 2. What will your forecasted variable cost be for each of the three years? 3. What will your forecasted fixed costs be for each year of the three years? 4. How would you calculate the break-even point? 5. How many chairs would you have to sell in order to break-even? Ron completed his business plan including his forecasted financial statements (balance sheet, income statement, cash flow statement). He presented a condensed forecasted income statement for Ross Chair Company for years ending March 31, 200x, 2007, and 2002. He also presented forecasted financial statements is additional information needed to answer each of the banker's nine questions, Ron Ross Chair Company Condensed Forecasted Income Statement For Years Ending March 31, 2006, 2007, 2002 200x 2007 2002 Total Chair Sales $80,000 $200,000 $240,000 Cost of Goods Sold $48,0,0,0 $120,000 $144.000 Gross Margin $32,000 $ 80,000 $ 96,000 Operating Expenses $20.000 $ 50.000 $70,000 Net Income Before Taxes $12,000 $ 30,000 $ 26,000 Less; Taxes (40%) $ 4.800 $ 12.000 $10.400 Ron's Break-even Analysis: Ron Ross works for a major chair retailer for the past 15 years. Opening his own chair retail outlet has crossed his mind many times for many years. Four months ago, Ron visited his bank and communicated his intentions of owning his own business to a loan manager. The manager told him to "prepare a business plan & be sure to include annual forecasted financial statements for a 3-year period". And he wanted Ron to present answers to the following five questions at their next meeting. 1. What will your selling price per chair be for each of the three years? 2. What will your forecasted variable cost be for each of the three years? 3. What will your forecasted fixed costs be for each year of the three years? 4. How would you calculate the break-even point? 5. How many chairs would you have to sell in order to break-even? Ron completed his business plan including his forecasted financial statements (balance sheet, income statement, cash flow statement). He presented a condensed forecasted income statement for Ross Chair Company for years ending March 31, 200x, 2007, and 2002. He also presented forecasted financial statements is additional information needed to answer each of the banker's nine questions, Ron Ross Chair Company Condensed Forecasted Income Statement For Years Ending March 31, 2006, 2007, 2002 200x 2007 2002 Total Chair Sales $80,000 $200,000 $240,000 Cost of Goods Sold $48,0,0,0 $120,000 $144.000 Gross Margin $32,000 $ 80,000 $ 96,000 Operating Expenses $20.000 $ 50.000 $70,000 Net Income Before Taxes $12,000 $ 30,000 $ 26,000 Less; Taxes (40%) $ 4.800 $ 12.000 $10.400