Use the Graphical Approach to CVP Analysis to Solve the Following

question 134

Short Answer

Use the graphical approach to CVP analysis to solve the following problem.
Huntsville Office Supplies (HOS) is evaluating the profitability of leasing a photocopier for its customers to use on a self-serve basis at 10′ per copy. The copier may be leased for $300 per month plus 1.5′ per copy on a full-service contract. HOS can purchase paper at $5 per 500-sheet ream. Toner costs $100 per bottle, which in normal use will last for 5,000 pages. HOS is allowing for additional costs (including electricity) of 0.5′ per copy.
a) How many copies per month must be sold in order to break even?
b) What will be the increase in monthly profit for each 1,000 copies sold above the break-even point?

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Definitions:

Snellen Chart

The Snellen chart is a visual acuity testing tool featuring lines of letters in decreasing size, used to determine the clarity or sharpness of one's vision.

Color Vision Acuity

Color Vision Acuity describes the ability of the eye to distinguish and perceive colors accurately and vividly.

Proctoscope

A medical instrument used to examine the interior of the rectal cavity.

Jaeger System

A chart used in optometry and ophthalmology to measure near vision acuity, consisting of texts of various sizes printed on a card.