Q. Assume which the ABC Corporation has a production (and sales) capacity of $1,000,000 per month. Its fixed costs---over a considerable range of volume are $350,000 per month, and the variable costs are $0.50 per dollar of sales.
a. Illustrate what is the annual breakeven point volume (D')?
b. Illustrate would be the effect on D' of decreasing the variable cost per unit by 25% if the fixed costs thereby increased by 10%?
c. Illustrate would be the effect on D' if the fixed costs were decreased by 10% and the variable cost per unit were increased by the same percentage.