Reference no: EM133265481
Question: CVP Analysis Using Published Financial Statements Condensed data in millions of dollars from Microsoft's 2019 and 2018 income statements follow:
2019 2018 Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $125,843 $110,360
Total cost of revenues and operating expenses . . . . . . . . . . . . . . . . 82,884 75,302
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 42,959 $ 35,058 REQUIRED
a. Develop a cost-estimation equation for Microsoft's annual cost of revenues and operating expenses using revenues as the activity.
b. Determine Microsoft's annual break-even point.
c. Predict operating pro?t for 2020, assuming 2020 sales of $150,000 million.
d. Identify the assumptions required to use the equations and amounts computed above.