Chapter 8, Problem 25E

Refer to the data given in the preceding exercise for Bianca Bicycle Company.

Required:

1. 1. Prepare a cost-volume-profit graph for the company. (Scale the vertical axis in millions of dollars.)
2. 2. Calculate Bianca Bicycle Company’s break-even point in units, and show the break-even point on the CVP graph.
3. 3. Explain why variable costing is more compatible with your CVP graph than absorption costing would be.