ASSIGNMENT - COST PROFIT ANALYSIS (CHAPTER 3)

Try It! 3-2

Best Windows is a small company that installs windows. Its cost structure is as follows:

Calculate (a) the breakeven point in units and revenues and (b) the number of windows Best
Windows must install and the revenues needed to earn a target operating income of $180,000.

Could we use the graph method and the graph in Exhibit 3-2 to figure out how many units Emma
must sell to earn an operating income of $1,200? Yes, but it is not as easy to determine the precise
point at which the difference between the total revenues line and the total costs line equals $1,200.
Recasting Exhibit 3-2 in the form of a profit–volume (PV) graph, however, makes it easier to answer
this question.

Try It! 3-3

Best Windows is a small company that installs windows. Its cost structure is as follows:

Calculate the number of windows Best Windows must install and the revenues needed to earn a
target net income of $63,000.