You have been asked to help the local commercial radio station prepare its business plan for the upcoming year.

The radio station operates for 18 hours a day (6 a.m. to midnight) seven days a week, all year. It broadcasts on aver- age 15 minutes of on-air advertising per hour. To sell the advertising time, the station uses commissioned sales staff who are paid a base salary plus commission that varies according to the volume of sales. The station manager asks you to calculate how many hours of advertising it would need to sell in order to break even.

Instructions

Calculate the fixed costs and the variable costs. Determine how many hours of advertising the station must sell in order to cover its costs. Explain how you calculated the break-even point.