Evaluation of fixed operating cost for achieving target

Reference no: EM1316471

Computation of fixed operating cost for achieving target profits.

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 pretax Profit of $1,000,000 during his first year of operation. Variable costs are 40% of sales.

How large can Rogers' fixed operating costs be if he is to meet his profit target?

Reference no: EM1316471

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