Problem 1: What is the basic C-V-P equation? What is a more detailed version of this equation?
Problem 2: What is the contribution margin, and why is it important for managers to know the contribution margins of their products?
Problem 3: How much will profits increase for every unit sold over the break-even point?
Problem 4: What is the major advantage of using C-V-P graphs?
Problem 5: When other factors are constant, what is the effect on profits of an increase in fixed costs? Of a decrease in variable costs?
Problem 6: What are the limiting assumptions of C-V-P analysis?