Use the Graphical Approach to CVP Analysis to Solve the Following

question 75

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:

Instructional Objectives

Clearly defined goals that outline expected outcomes of educational programs or training sessions, guiding learning activities and assessments.

Performance-centred

Focused on improving or optimizing the effectiveness of an individual's or group's work output.

On-the-job Training

Practical training provided to employees at the workplace while they are doing their jobs, allowing them to acquire new skills and competencies.

Workplace

The physical or virtual location where work is carried out, including offices, factories, or online platforms.