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CVP analysis involves calculation of breakeven point in units.
Roney Rogers, a recent business school graduate, plans to open a wholesale dairy products firm. The business will be completely financed with equity. Rogers expects first year sales to total $5,500,000. He desires to earn a target pre tax profit of $1,000,000 during his first year of operation. Variable costs are 40% of sales. What is Rogers' breadeven level of sales at the level of fixed operating cost ?
Fixed cost $2,300,000
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