Rodney Rodgers plans to open a wholesale dairy products firm which will be completely financed with equity. He expects first year sales to total $5,500,000, and desires to earn a target pre tax profit of $1,000,000 during first year of operation. Variable costs are 40% of sales.
A) How large can Rogers fixed operating costs be if he is to meet his profit target?
B) What is Rogers breakeven level of sales at the level of fixed operating costs determined in (A)?
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