Question
Sales Volume Question A group of venture capitalists is considering putting money into Reada Books, which wants to produce a new reader for electronic books.
Sales Volume Question
A group of venture capitalists is considering putting money into Reada Books, which wants to produce a new reader for electronic books. The variable cost per unit is estimated at $250, the sales price would be set at twice the vC/unit, or $500, and fixed costs are estimated at $750,000. Depreciation is $25,000 per year. The investors will put up the funds if the project is likely to have an operating income of $500,000 or more. What sales volume would be required in order to meet the minimum profit goal? (Hint: Use the accounting breakeven formula, but include the required profit in the numerator.)
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