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    sfowler123's Avatar
    sfowler123 Posts: 1, Reputation: 1
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    #1

    May 14, 2012, 07:09 PM
    Calculating Yearly Losses
    I have an accounting homework question, and just want to be sure I have it down.


    You charge $17 for a CD, including shipping. You pay suppliers $13 for the CD. You anticipate fixed costs in the first year to total $1,500,000 and you anticipate losing $1,500,000 on sales.

    1. How many units must you sell to achieve no more than $1,500,000 loss in the first year?

    2. What is total sales and how m any units must be sold for the company to break even?
    paraclete's Avatar
    paraclete Posts: 2,706, Reputation: 173
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    #2

    May 14, 2012, 08:18 PM
    Quote Originally Posted by sfowler123 View Post
    I have an accounting homework question, and just want to be sure I have it down.


    You charge $17 for a CD, including shipping. You pay suppliers $13 for the CD. You anticipate fixed costs in the first year to total $1,500,000 and you anticipate losing $1,500,000 on sales.

    1. How many units must you sell to achieve no more than $1,500,000 loss in the first year?

    2. What is total sales and how m any units must be sold for the company to break even?
    so you have $4 contribution margin. You don't know your shipping cost. I don't understand this sentence
    you anticipate losing $1,500,000 on sales.
    taken in the ordinary meaning it would say to me sales are 0

    FC/CM = Pb (units)
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