Breakeven point analysis

Homewatch Company is a security firm that offers house-sitting services during owners’ vacations and other absences. The daily fees are $20 and variable costs are $7. The fixed operating costs are $1,850 per period. Use a computer spreadsheet.

A. What is the breakeven point in customer days (one customer for one day)?

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B. If Homewatch desires a before-tax profit of $600 per period, how many customer days are needed?

C. If Homewatch desires a profit of $600 per period after taxes of 30 percent, how many customer days are needed?

D. If the selling price is increased by 10 percent, what is the breakeven point?

E. If the fixed costs are decreased by $850, what is the breakeven point?

Visit the text Online Learning Center at www.mhhe.com/ainsworth6e for additional problem material that accompanies this chapter.

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