What is the amount of revenue that Avocado should earn each month to break even? (Round your answer to the nearest dollar.) O $4285 O $4769 O $5515 O $10,243
What is the amount of revenue that Avocado should earn each month to break even? (Round your answer to the nearest dollar.) O $4285 O $4769 O $5515 O $10,243
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
Question
Transcribed Image Text:Avocado Company sells guitars to Mexican restaurants. The guitars
sell for $600, and the fixed monthly operating costs are as follows:
Rent and utilities
$4800
Wages and benefits to
employees
2300
Other expenses
485
Avocado understand that for every dollar of sales, $0.65 went to cover
fixed costs, and anything above that point was profit.
What is the amount of revenue that Avocado should earn each month
to break even? (Round your answer to the nearest dollar.)
O $4285
O $4769
O $5515
O $10,243
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