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Assignment 2: Discussion—CVP Analysis

Review Decision Case 1 (Steve and Linda Hom) starting on page 984 of your text. In your initial post, answer the two case questions:

  1. Compute the annual breakeven number of meals and sales revenue for the restaurant.
  2. Compute the number of meals and the amount of sales revenue needed to earn operating income of $75,600 for the year.

In addition, address the following in one to two paragraphs:

  1. Identify and discuss several qualitative factors that should be considered in the decision process in addition to the quantitative data already computed in the case assignment.
  2. What are the potential benefits of applying CVP analysis to business decision making?
  3. Provide an example of another business scenario that could benefit from CVP analysis and explain how you would apply CVP analysis in the decision-making process.

By Saturday, March 22, 2014 respond to the discussion questions. Submit your response to the appropriate Discussion Area. Use the same Discussion Area to comment on your classmates’ submissions and continue the discussion until Wednesday, March 26, 2014.

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