Chapter 21, Problem 21.17EX

a.

To determine

Cost-Volume-Profit Analysis: It is a method followed to analyze the relationship between the sales, costs, and the related profit or loss at various levels of units sold. In other words, it shows the effect of the changes in the cost and the sales volume on the operating income of the company.

To construct: a cost-volume-profit chart.

b.

To determine

To estimate: the break-even sales (dollars) by using the cost-volume-profit chart constructed in part (a).

c.

To determine

To explain: the main advantage of presenting the cost-volume-profit analysis in graphic form rather than equation form.