CVP Graphs Relationships Use the Interactive Graph to answer the following quest
ID: 2483261 • Letter: C
Question
CVP Graphs Relationships
Use the Interactive Graph to answer the following questions:
Lotts Company produces and sells one product. The sales price, variable cost and total fixed costs are shown below.
What is the breakeven point in units?
units
Now, using the interactive graph tool, change the sales price to $12. This change in sales price causes the breakeven point to - Select your answer -increasedecreaseno changeItem 2 .
Reset the sales price to $10 and increase the variable cost per unit to $6 per unit. The changes in sale price and variable costs cause the breakeven point to - Select your answer -increasedecreaseno changeItem 3 .
Using the interactive graph tool, continue to change one of the 3 variables to analyze what happens to the cost and/or revenue lines, and the breakeven point.
Based on your analysis answer the following questions:
If the fixed cost increases, the breakeven point - Select your answer -increasesdecreasesno changeItem 4 . If the fixed cost decreases, the breakeven point - Select your answer -increasesdecreasesno changeItem 5 .
If the variable cost per unit increase, the breakeven point - Select your answer -increasesdecreasesno changeItem 6 . If the variable cost per unit decrease, the breakeven point - Select your answer -increasesdecreasesno changeItem 7 .
If the sales price increases, the breakeven point - Select your answer -increasesdecreasesno changeItem 8 . If the Sales price decreases, the breakeven point - Select your answer -increasesdecreasesno changeItem 9 .
Sale price per unit $10.00 Variable cost per unit $5.00 Fixed costs $10,000Explanation / Answer
a)
Break-even point = Fixed costs/ (price – variable cost per unit)
= 10,000 /(10-5)
= 2000 units
b)
Sales price = 12
Break-even point = Fixed costs/ (price – variable cost per unit)
= 10,000 /(12-5)
= 1428.57 units
c)
Price =10
Variable cost per unit = 6
Break-even point = Fixed costs/ (price – variable cost per unit)
= 10,000 /(10-6)
= 2,500 units
d) If the fixed cost increase, break even point increases and vice versa.
e) If the variable cost per unit increases, break even point increases and vice versa.
f) if the sales price increases, break even point will decrease and vice versa.