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Multiple-Level Break-Even Analysis Kucera Associates provides marketing services for a number of small manufacturing firms. Kucera receives a commission of 10 percent of sales. Operating costs are as follows: Unit-level costs $ 0.05 per sales dollar Sales-level costs $ 400 per sales order Customer-level costs $1,000 per customer per year Facility-level costs $75,000 per year (a) Determine the minimum order size in sales dollars for Kucera to break even on an order. $ 8,000 (b) Assuming an average customer places five orders per year, determine the minimum annual sales required to break even on a customer. $ 30,000 x (c) What is the average order size in (b)? $ 6,000 x (d) Assuming Kucera currently serves 100 customers, with each placing an average of five orders per year, determine the minimum annual sales required to break even. $ 3,000 (e) What is the average order size in (d)? $ 6,000

Multiple-Level Break-Even Analysis Kucera Associates provides marketing services for a number of small manufacturing firms. Kucera receives a commission of 10 percent of sales. Operating costs are as follows: Unit-level costs $ 0.05 per sales dollar Sales-level costs $ 400 per sales order Customer-level costs $1,000 per customer per year Facility-level costs $75,000 per year (a) Determine the minimum order size in sales dollars for Kucera to break even on an order. $ 8,000 (b) Assuming an average customer places five orders per year, determine the minimum annual sales required to break even on a customer. $ 30,000 x (c) What is the average order size in (b)? $ 6,000 x (d) Assuming Kucera currently serves 100 customers, with each placing an average of five orders per year, determine the minimum annual sales required to break even. $ 3,000 (e) What is the average order size in (d)? $ 6,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Multiple-Level Break-Even Analysis Kucera Associates provides marketing services for a number of small manufacturing firms. Kucera receives a commission of 10 percent of sales. Operating costs are as follows: Unit-level costs $ 0.05 per sales dollar Sales-level costs $ 400 per sales order Customer-level costs $1,000 per customer per year Facility-level costs $75,000 per year (a) Determine the minimum order size in sales dollars for Kucera to break even on an order. $ 8,000 (b) Assuming an average customer places five orders per year, determine the minimum annual sales required to break even on a customer. $ 30,000 x (c) What is the average order size in (b)? $ 6,000 x (d) Assuming Kucera currently serves 100 customers, with each placing an average of five orders per year, determine the minimum annual sales required to break even. $ 3,000 (e) What is the average order size in (d)? $ 6,000
Transcribed Image Text:Multiple-Level Break-Even Analysis Kucera Associates provides marketing services for a number of small manufacturing firms. Kucera receives a commission of 10 percent of sales. Operating costs are as follows: Unit-level costs $ 0.05 per sales dollar Sales-level costs $ 400 per sales order Customer-level costs $1,000 per customer per year Facility-level costs $75,000 per year (a) Determine the minimum order size in sales dollars for Kucera to break even on an order. $ 8,000 (b) Assuming an average customer places five orders per year, determine the minimum annual sales required to break even on a customer. $ 30,000 x (c) What is the average order size in (b)? $ 6,000 x (d) Assuming Kucera currently serves 100 customers, with each placing an average of five orders per year, determine the minimum annual sales required to break even. $ 3,000 (e) What is the average order size in (d)? $ 6,000
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