Cost- volume profit (CVP) chart: The CVP chart shows the relation between cost, units and profit of the product. The elements of the CVP charts are explained as follows: 1. Sales Line: Sales line shows the total sales at a given level of output. It changes with the change in level of units. 2. Fixed Cost line: Fixed cost line represents the amount to total fixed cost at a given level of production. It remains same irrespective of the level of sales. 3. Total Cost line: Total cost line represents the amount of total cost ate a given level of output. The Total costs changes with the change in level of output. 4. Breakeven point: In CVP graph, Breakeven point is the point at which Sales line meets Total cost line, or say it is the level of output at which sales is equal to the total cost and there is no profit or loss. Breakeven point in units is calculated with the help of following formula: B r e a k e v e n p o i n t ( U n i t s ) = T o t a l F i x e d C o s t ( S a l e s p r i c e p e r u n i t – V a r i a b l e c o s t p e r u n i t ) To determine: The effect of each change on the elements of CVP graph

Question

Want to see the full answer?

Answer 1

Question

Chapter 21, Problem E21.40E

To determine

Concept Introduction:

Cost- volume profit (CVP) chart: The CVP chart shows the relation between cost, units and profit of the product. The elements of the CVP charts are explained as follows:

1. Sales Line: Sales line shows the total sales at a given level of output. It changes with the change in level of units.

2. Fixed Cost line: Fixed cost line represents the amount to total fixed cost at a given level of production. It remains same irrespective of the level of sales.

3. Total Cost line: Total cost line represents the amount of total cost ate a given level of output. The Total costs changes with the change in level of output.

4. Breakeven point: In CVP graph, Breakeven point is the point at which Sales line meets Total cost line, or say it is the level of output at which sales is equal to the total cost and there is no profit or loss. Breakeven point in units is calculated with the help of following formula:

$B r e a k e v e n p o i n t (U n i t s) = \frac{T o t a l F i x e d C o s t}{(S a l e s p r i c e p e r u n i t - V a r i a b l e c o s t p e r u n i t)}$

To determine: The effect of each change on the elements of CVP graph

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Exercise 3-12A (Algo) Conducting sensitivity analysis using a spreadsheet LO 3-5 Use the below table to answer the following questions. Selling Price$27.00 Variable 2,100 3,100 Fixed Cost Cost Sales Volume 4,100 Profitability 5,100 6,100 $25,700 8 $14,200 $33,200 $52,200 $71,200 $90,200 25,700 9 12,100 30,100 48,100 66,100 84,100 25,700 10 10,000 27,000 44,000 61,000 78,000 35,700 8 4,200 23,200 42,200 61,200 80,200 35,700 9 2,100 20,100 38,100 56,100 74,100 35,700 10 17,000 34,000 51,000 68,000 45,700 8 (5,800) 13,200 32,200 51,200 70,200 45,700 9 (7,900) 10,100 28,100 46,100 64,100 45,700 10 (10,000) 7,000 24,000 41,000 58,000 Required a. Determine the sales volume, fixed cost, and variable cost per unit at the break-even point. b. Determine the expected profit if Rundle projects the following data for Delatine: sales, 4,100 bottles; fixed cost, $25,700; and variable cost per unit, $10. c. Rundle is considering new circumstances that would change the conditions described in…

Which of the following would be classified as a current liability ?

Provide correct answer general Accounting question