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American Investor Group is opening an office in Portland, Oregon. Fixed monthly costs are office rent ($8,600), depreciation on office furniture ($2,000), utilities ($2,000), special telephone lines ($1,100), a connection with an online brokerage service ($2,600), and salary of a financial planner ($11,700). Variable costs include payments to the financial planner (8% of revenue), advertising (13% of revenue), supplies and postage (3% of revenue), and usage fees for the telephone lines and computerized brokerage service (6% revenue). Read the requirements. 0 10 20 30 4 40 50 60 70 80 Click to Units (Trades) enlarge graph (After you hit continue the screen may take you below the beginning of the next step. If so, scroll back up to the top of the step.) The final step in our graph is to determine where the operating income and the operating loss areas are on the graph that you previously prepared. Review the graphs and determine which has the correct shaded areas labeled for income and loss. (Enlarge each gr before selecting your answer.) O A. O B. O C. O D. 80- Q 80- 80- 80- Q Income Dollars (Thousands) Dollars (Thousands) Dollars (Thousands) Income Dollars (Thousands) Income Loss income Loss 0 1020 30 40 50607080 0 1020 30 40 50607080 0 1020 30 40 50607080 0 102030 405060 7080 Units (Trades) Units (Trades) Units (Trades) Units (Trades) Requirement 4. Suppose that the average revenue American earns increases to $2,000 per trade. Compute the new breakeven point in trades. How does this affect the breakeven point? Under new assumptions, American must make trades to break even. With the increase in the average revenue per trade, the breakeven point in number of tradesAmerican Investor Group is opening an office in Portland, Oregon. Fixed monthly costs are office rent ($8,600), depreciation on office furniture ($2,000), utilities ($2,000), special telephone lines ($1,100), a connection with an online brokerage service ($2,600), and the salary of a financial planner ($11,700). Variable costs include payments to the financial planner (8% of revenue), advertising (13% 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. graph Next plot the following lines: the sales revenue line, fixed cost line, and the total cost line. (Enlarge the graph to medium size and use the line tool button displayed below to draw the graph. Do NOT use plot points that require rounding. [Hint: refer to your computations from Requirements 1 and/or 2, as appropriate, to assist in identifying plot points.] Be sure to select a label for each line drawn.) 80- 70 60 Dollars (Thousands) 10American Investor Group is opening an office in Portland, Oregon. Fixed monthly costs are office rent ($8,600), depreciation on office furniture ($2,000), utilities ($2,000), special telephone lines ($1,100), a connection with an online brokerage service ($2,600), and the salary of a financial planner ($11,700). Variable costs include payments to the financial planner (8% of revenue), advertising (13% 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 3. Graph American's CVP relationships. Assume that an average trade leads to $800 in revenue for American. Show the breakeven point, the sales revenue line, the fixed cost line, the total cost line, the operating loss area, the operating income area, and the sales in units (trades) and dollars when monthly operating income of $11,200 is earned. We will begin graphing the CVP relationships by first plotting the two points: breakeven point and the point where monthly operating income of $11,200 is earned. (Enlarge the graph to medium size and use the point tool button displayed below to draw the graph. Be sure to select a label for each point plotted.) 70- 60 50- Dollars (Thousands) 30- W 10 ? Click the graph, choose a tool in the palette and follow the instructions to create your graph.American Investor Group is opening an office in Portland, Oregon. Fixed monthly costs are office rent ($8,600), depreciation on office furniture ($2,000), utilities ($2,000), special telephone lines ($1,100), a connection with an online brokerage service ($2,600), and the salary of a financial planner ($11,700). Variable costs include payments to the financial planner (8% of revenue), advertising (13% 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. American must make 50 trades to break even. i Requirements Requirement 2. Use the equation approach to compute the dollar revenues needed to earn a monthly target profit of $11,200. Begin by selecting the formula to compute the required sales in units to earn a target profit. Net sales revenue Variable costs Fixed costs Target profit 1. Use the contribution margin ratio approach to compute American's breakev revenue in dollars. If the average trade leads to $800 in revenue for Rearrange the formula you determined above and compute the required number of trades to earn a monthly target profit of $11,200. American, how many trades must be made to break even? 2. Use the equation approach to compute the dollar revenues needed to earn American must make trades to earn a monthly operating income of $11,200. monthly target profit of $11,200. 3 . Graph American's CVP relationships. Assume that an average trade leads Now compute the dollar revenues needed to earn a monthly target profit of $11,200. $800 in revenue for American. Show the breakeven point, the sales revenue line, the fixed cost line, the total cost line, the operating loss area, the American needs in revenues to earn a monthly operating income of $11,200. operating income area, and the sales in units (trades) and dollars when monthly operating income of $11,200 is earned. (After vou hit continue the screen may take vou below the beainning of the next step. If so. scroll back up to the ton of the step.) 4. Suppose that the average revenue American earns increases to $2,000 per trade. Compute the new breakeven point in trades. How does this affect the breakeven point? (Round your answers to the nearest whole number.) Print Done Click the graph, choose a tool in the palette and follow the instructions to create your graph