COST-VOLUME-PROFIT GRAPHS
Lotts Company produces and sells one product. The selling price is $10, and the unit variable cost is $6. Total fixed costs are $10,000.
Required:
1. Prepare a CVP graph with ‘‘Units Sold'' as the horizontal axis and ‘‘$ Profit'' as the vertical axis. Label the break-even point on the horizontal axis.
2. repare CVP graphs for each of the following independent scenarios:
a. Fixed costs increase by $5,000.
b. Unit variable cost increases to $7.
c. Unit selling price increases to $12.
d. Assume that fixed costs increase by $5,000 and unit variable cost is $7.