Chapter 21, Problem 14DQ

To determine

Cost-volume profit analysis is a managerial accounting technique which is used to determine how changes in costs and volume affect a company’s operating income and net income.

In CVP analysis there are certain assumptions as below:

1. Costs are classified as either fixed cost or variable cost.
2. All units produced are sold. There is no inventory.
3. Sales price per unit, variable cost per unit and total fixed cost remains constant.

To determine:

In the given question, we have to determine the estimated profit at the break-even point in CVP analysis.