CheckPoint Cost volume and profit questions

# CheckPoint Cost volume and profit questions - then plot the...

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7. Mixed cost must be classified into the fixed and variable elements. The approach used to affect the classification of this is the high-low method depending on how sensitive the analysis is going to be. Sometimes it may be necessary to use a full analysis to understand the affects of mixed cost when it comes to CVP analysis. 9. I disagree that CVP analysis is based entirely on unit costs. There are several things that affect CVP analysis. It is based on the volume and level of activity, unit selling prices, variable cost per unit, total fixed costs, and the sales mix. 14. I first would explain to Linda that we would need to create a break-even analysis to determine her break-even point. The first thing to do is plot the total revenue starting with zero being the starting point. Then plot the total fixed cost using a horizontal line,
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Unformatted text preview: then plot the total cost line. The break-even point is then determined from the intersection of the total cost line and total revenue line. The break-even dollar amount is found by drawing a line from the break-even point to the vertical axis with a horizontal line. The break-even point in units sold is found by drawing a line from the break-even point to the horizontal axis using a vertical line. In order to graph this information, one must know the unit selling price and multiply he price by the units sold. To see Linda’s activity level, you must know the intended amount of sales, cost per unit, and the selling price of each unit. With this information then the graph can be constructed to show CVP analysis....
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## This note was uploaded on 06/13/2010 for the course ACCOUNTING 220 taught by Professor Connie during the Spring '10 term at Phoenix School of Law.

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