Questions
1. Calculate Tony’s Break-even point in revenue and cash break-even point in revenue.
2. How many prints a year and what level of revenue must Tony reach if he wants to earn
$275,000 in profit before taxes?
3. Calculate Tony’s annual revenue break-even point by using the PV ratio if he is to meet the
$275,000 profit before tax goal.
4. If he increases his advertising budget by $20,000, what would be Tony’s new yearly break-even
point in prints and in revenue? How many additional prints must Tony develop to increase his
revenue to cover the incremental advertising budget?
5. If Tony reduces his direct material costs for processing the prints by $25,000, what would be his
new break-even point in units and in revenue?