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Label (a) and (b) in the graph and compute the number of units sold for each. Flexible budget line Master budget $ 36,000 (a) $0 Flexible budget = $ (6,000) (b) Units sold Slope = Contribution margin per unit = $ 4.00 %3D Fixed costs $ 70,000 (a) units (b) units Operating loss Operating profit

Label (a) and (b) in the graph and compute the number of units sold for each. Flexible budget line Master budget $ 36,000 (a) $0 Flexible budget = $ (6,000) (b) Units sold Slope = Contribution margin per unit = $ 4.00 %3D Fixed costs $ 70,000 (a) units (b) units Operating loss Operating profit

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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### Graph Analysis for Educational Purposes **Graph Description:** The graph illustrates the relationship between operating profit and the number of units sold, with a focus on calculating the break-even point and budget scenarios. - **Y-axis (Vertical):** Represents the operating profit/loss in dollars. - **X-axis (Horizontal):** Represents the number of units sold. - A line labeled "Flexible budget line" slopes upward, indicating a positive contribution margin per unit. **Key Points:** - **Master Budget Profit:** $36,000 - **Flexible Budget Loss:** ($6,000) - **Fixed Costs:** $70,000 - **Slope:** Contribution margin per unit = $4.00 **Labeled Points:** - **(a):** The intersection of the flexible budget line with the $0 operating profit level. - **(b):** The intersection of the flexible budget line with the master budget profit level ($36,000). **Table:** | | Number of Units Sold | |------------|----------------------| | **(a)** | | | **(b)** | | **Objective:** Calculate the number of units sold at points (a) and (b) based on the provided data and linear relationships. **Explanation of Calculations:** - To find the number of units sold at point (a), solve for when the operating profit is $0. - For point (b), solve for the operating profit equal to the master budget ($36,000). To complete the table, you will need to perform these calculations using the slope and fixed cost data given.
Transcribed Image Text:### Graph Analysis for Educational Purposes **Graph Description:** The graph illustrates the relationship between operating profit and the number of units sold, with a focus on calculating the break-even point and budget scenarios. - **Y-axis (Vertical):** Represents the operating profit/loss in dollars. - **X-axis (Horizontal):** Represents the number of units sold. - A line labeled "Flexible budget line" slopes upward, indicating a positive contribution margin per unit. **Key Points:** - **Master Budget Profit:** $36,000 - **Flexible Budget Loss:** ($6,000) - **Fixed Costs:** $70,000 - **Slope:** Contribution margin per unit = $4.00 **Labeled Points:** - **(a):** The intersection of the flexible budget line with the $0 operating profit level. - **(b):** The intersection of the flexible budget line with the master budget profit level ($36,000). **Table:** | | Number of Units Sold | |------------|----------------------| | **(a)** | | | **(b)** | | **Objective:** Calculate the number of units sold at points (a) and (b) based on the provided data and linear relationships. **Explanation of Calculations:** - To find the number of units sold at point (a), solve for when the operating profit is $0. - For point (b), solve for the operating profit equal to the master budget ($36,000). To complete the table, you will need to perform these calculations using the slope and fixed cost data given.
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