Greg Morrison recently graduated from mortuary school. He is considering opening his own funeral home. A funeral home is a high-fixed cost business, as it requires considerable expenditures for facilities,

Greg Morrison recently graduated from mortuary school.  He is considering opening his own funeral home.  A funeral home is a high-fixed cost business, as it requires considerable expenditures for facilities, labor, and equipment, no matter how many families are served.  Assume the annual fixed cost of operations is $800,000.  Further assume that the only significant variable cost relates to burial containers like urns and caskets.  An average casket costs $1,200.  Greg’s banker has asked a variety of questions in contemplation of providing a loan for this business. If the average family is charged $6,000 for services and a burial container, how many families must be served to clear the break-even point?

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