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:

Provincial Legislation

Laws and regulations enacted by the legislative bodies of provinces or territories within a federal system, addressing regional matters.

Actual Authority

The express and implied powers given to an agent by a principal, allowing them to make legally binding decisions on the principal’s behalf.

Apparent Authority

Apparent authority refers to a situation where someone reasonably believes another has the authority to act on behalf of an organization due to the organization's actions or communications.

Principal

The primary individual or entity involved in a transaction or contract, or a sum of money lent or invested on which interest is paid.