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Nator Group is establishing an factory in Newsouth wale, Australia. Fixed monthly expenses are factory...

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Accounting

Nator Group is establishing an factory in Newsouth wale, Australia. Fixed monthly expenses are factory rent ($9,000), depreciation on factory machine ($2,000), utilities ($1,700), telephone bills ($1,500 ), a connection with an online service ($3,000 ), and the salary of a worker ($5,500). Variable costs include payments to the marketer planning (11% of revenue), administration expense (10% of revenue), supplies (5% of revenue), and usage fees for the telephone lines and water bill at office(10% of revenue).

Requirements

  1. Apply the contribution margin ratio approach to calculate Nator Group breakeven revenue in dollars. If the average service leads to $1,500 in revenue per service for Nator Group, how many service must be made to break even?
  2. Apply the equation approach to calculate the dollar revenues needed to earn a monthly target profit of $13,400.
  3. Suppose that the average revenue Nator earns increases to $1,600 per service. Compute the new breakeven point in service. How does this affect the breakeven point?

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