Chapter 21, Problem 4QS

To determine

Concept Introduction:

Cost Volume Profit (CVP) Analysis:

The Cost Volume Profit analysis is the analysis of the relation between cost, volume, and profit of a product. It analyzes the cost and profits at the different level of production, in order to determine the breakeven point and required the level of sales to earn the desired profit.

If the cost contains only variable cost, than graph will always start with zero as the starting point and will tilt towards upward sloping with increase in units. Whenever the cost contains only fixed cost, the graph will be a straight line. However, when the graph contains a mixture of both the cost, than the graph will start above zero and will tilt towards upward sloping with increase in units.

Requirement-1:

To Identify:

The type of the cost

To determine

Concept Introduction:

Cost Volume Profit (CVP) Analysis:

The Cost Volume Profit analysis is the analysis of the relation between cost, volume, and profit of a product. It analyzes the cost and profits at the different level of production, in order to determine the breakeven point and required the level of sales to earn the desired profit.

If the cost contains only variable cost, than graph will always start with zero as the starting point and will tilt towards upward sloping with increase in units. Whenever the cost contains only fixed cost, the graph will be a straight line. However, when the graph contains a mixture of both the cost, than the graph will start above zero and will tilt towards upward sloping with increase in units.

Requirement-1:

To Identify:

The effect on the cost at the level of 3000 units