Chapter 20: Q26RQ (page 1120)
How can CVP analysis be used by companies with multiple products?
The combination of products used that sums up total sales is known as the sales mix.
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What are the three approaches to calculating the sales required to achieve the breakeven point? Give the formula for each one.
What is a company’s cost structure? How can cost structure affect a company’s profits?
Determine how each change effects the elements of the cost-volume-profit graph by placing an X in the appropriate column(s).
| EFFECT | ||||||||
| Sales Line | Fixed Cost Line | Total cost line | Breakeven point | |||||
Change | Slope Increases | Slope decreases | Shifts up | Shifts Down | Slope Increases | Slope Decreases | Increases | Decreases |
Sales price per unit Increases | ||||||||
Sales price per unit Decreases | ||||||||
Variable cost per unit Increases | ||||||||
Variable cost per unit decreases | ||||||||
Total fixed cost increases | ||||||||
Total fixed cost decreases | ||||||||
A furniture manufacturer specializes in wood tables. The tables sell for \(100 per unit and incur \)40 per unit in variable costs. The company has \(6,000 in fixed costs per month. Calculate the breakeven point in units under each independent scenario.
14. Variable costs increase by \)10 per unit.
15. Fixed costs decrease by $600.
16. Sales price increases by 10%.
A chain of convenience stores has one manager per store who is paid a monthly salary. Relative to Store #36 located in Atlanta, Georgia, is the manager’s salary fixed or variable? Why?
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