Analyzing a cost-volume-profit graph Nolan Rouse is considering starting a Web-based educational business. e-Prep MBA He plans to offer a short-course review of accounting for students entenng MBA programs. The materials would be available on a password-protected Web site: students would complete the course through sett-study. Rouse would have to grade the course assignments, but most or the work would be in developing the course materials, setting up the site, and marketing. Unfortunately. Rouse’s hard drive crashed before he finished his financial analysis. However, he did recover the following partial CVP chart:
Requirements
1. Label each axis. the sales revenue line, the total costs fine, the fixed costs line, the operating income area, and the breakeven point.
2. Ii Rouse attracts 300 students to take the course, will the venture be profitable/ Explain your answer.
3. What are the breakeven sales in students and dollars?
