When constructing a CVP graph, the horizontal axis
represents unit sales.
The total amount of fixed expense is represented on
a CVP graph at the point where the line crosses the y
axis
Considering that each product has its own unique
sales price and contribution margin per unit, the
contribution margin ratio approach to target profit
analysis is likely the more easily applied approach by
companies with multiple products.
If operating leverage is high, a small percentage
increase in sales can produce a much higher
percentage increase in net operating income
When concerning multiple products: a change in the
sales mix will most likely result in a change to the
break-even point, each product most likely creates a
unique total of fixed costs, and each product most
likely has a unique contribution margin

To prepare a CVP graph, lines must be drawn
representing total revenue, total expense, and total
fixed expense
Target profit analysis can be calculated using the
formula method or the equation method. It is also
one of the key uses of CVP analysis