Reference no: EM132509700

The loan department of Grisswald National Bank is responsible for processing loan applications. The loan processing fee for clients is $300 per application. Joan Evergreen, the manager of the department, wants to perform some cost-volume-pro?t analysis and is looking at computing a break-even point and doing some target profit calculations. She has collected the following data: Variable costs in the loan department are as follows: wages of employees processing the loans, $16.50 per hour (a loan application takes four hours to process), of?ce supplies, $7.20 per loan application, and other variable costs, $14.30 per loan application.

The annual ?xed costs of the loan department are as follows:

equipment depreciation, 56,500,

of?ce rental, $16,000,

other ?xed costs, $20,000.

FOR ALL CALCULATIONS BELOW, ROUND OFF TO A WHOLE NUMBER.

Question 1. Compute the number of loan applications the loan department must process to break-even.

Question 2. Compute the number of loan applications the loan department must process to earn a pro?t of $36,125.

Question 3. Change one element of variable cost and one element of ?xed cost and compute:

a. the new break-even point.

b. the number of loan applications to earn a pro?t of $60,000.