Use the Graphical Approach to CVP Analysis to Solve the Following

question 1

Short Answer

Use the graphical approach to CVP analysis to solve the following problem.
Jordan is developing a business plan for a residential building inspection service he wants to start up. Rent and utilities for an office would cost $1,000 per month. The fixed costs for a vehicle would be $450 per month. He estimates that the variable office costs (word processing and supplies) will be $50 per inspection and variable vehicle costs will be $25 per inspection. Jordan would also spend $200 per month to lease a computer, and $350 per month for advertising.
a) If he charges $275 per inspection, how many inspections per month are required before he can "pay himself?"
b) How many inspections per month are required for Jordan to be able to draw a salary of $4,000 per month?

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Definitions:

Compounded Quarterly

This is the procedure of determining interest by adding it to the original investment amount as well as the previously accumulated interest, performed every quarter.

Semi-Annual Period

A six-month time frame or duration, often used in the context of payments, compounding interest, or reporting intervals.

Compounded Monthly

Refers to the calculation of interest added to the principal of a deposit or loan based on a monthly cycle.

Quarterly Compounding

The process of calculating interest earned on an investment or loan every three months, leading to interest being earned on interest.