Assignment 3: Excel Problems

# Pl&26A (L. OBl. 2, 3,4) Compudng brcd@r€n ebe md sdcs nceded to esn a targe! op€ra$ng ircome; gr4hing C\lP rdatiordsPq sansttvt| anafyds [gr'45 minl

Big, Timc Inr.csror Group is opening irn off icc in l)al l :rr . l - ixcd morrthlv costs are

off ice rent ($8,2f i)). dr1'reciat ion on of i ice furniturc 1$ l . i {)0), uri l idcs ($2,.300), sry-

cial telcphone lrnes (51,3t)0). a connrc-t irrn wrth an onl ine brokeratr le scrvice

($2,900), and rhc salarv oi a f inancial planncr ($l t . f txl l . Variablc cosu; tncludc paY-

menrs to rhc f inanci ir l planner {9"h oi revenue ), at lvcrt ising, \ ' l29i ' oi revenuc). sup-

pl ies anel Fx)sr; lge \4"/" ef revenue), and usag,e iees tor the telephone lrnes .rnd

c<tmputerizctl brokeragc servicc i.5% of r*'cnue)'

Regulrlmtntr

l. Usc rhc cunriburion margirr rario CVP tirrmula t{) e ()rrputc Big, llme's breakct'cn

revenur in dollars. If lhe averugc rradc leads to $tl(X) In revenur for Big Time. horv

man.v trades mtrst be made to break even?

2. I Ise rhc incomc statemcnt equirt ion approach t() c()mpure rhe dolLlr revenues

nccdcd t() carn a target monthly opcrating ineomc (tt $ l 1,2fi).

3. Graph Big Timc's CVP relatronships. Assume rhilt .r1 average rr,rde leads to $80{)

in revenue for Big Time. Show the brcakeven ;xlnr, thc sales rcvcnue line, tht

fixed cost llnc, the total cost linc. the operafing Lxs area, the operatrng, income

arca. and rhe sales in units {trades) and dollars s'hcrr monthly opcrirring inconlc

of $1 1,2()0 ir carned. Thc graph should rangt lrotn 0 so 8() units.

4. Supgtose rhar rhe avrrage rcvrnue Big Time earns incrcascs to $900 Fer tradc. (. .rmputc thc new breakevcn Jxrint in tradcs. Hou'drrs this at ieet the

breakeven point?