Chapter 19, Problem 3ADM

A.

To determine

Break-even Analysis: It refers to an analysis of the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows:

$\text{Break-even}\text{point}\text{in}\text{Sales}\left(\text{units}\right)=\frac{\text{Fixed}\text{Costs}}{\text{Contribution}\text{Margin}\text{per}\text{unit}}$

To compute: Company M’s break-even number of accounts.

B.

To determine

To compute: the average weekday profit

C.

To determine

To compute: the average weekend day profit

D.

To determine

To compute: Company M’s revised break-even number of accounts.

E.

To determine

To Explain: Whether the company will still remain profitable for an average weekday under the scenario in (D).