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Question - Manu's Tacos sells seven different burritos at a fixed price of $9. Assume variable costs are $6 per burrito and fixed operating costs are $120,000 per year.
Required -
a. Determine the annual break-even point in tacos.
b. Prepare a cost-volume-profit graph for the company. Use a format that emphasizes the contribution margin. The vertical axis should vary between $0 and $800,000 in increments of $100,000. The horizontal axis should vary between 0 tacos and 80,000 tacos, in increments of 10,000 tacos. Label the graph in thousands.
c. Prepare a profit-volume graph for the company. The vertical axis should vary between $(150,000) and $150,000 in increments of $50,000. The horizontal axis should vary as described in requirement (b). Label the graph in thousands.
d. Evaluate the profit-volume graph. In what ways is it superior and in what ways is it inferior to the traditional cost-volume-profit graph.
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