module 04 discussion management decision

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In response to a request from your immediate supervisor, you have prepared a CVP graph portraying the cost and revenue characteristics of your company’s product and operations.

  1. Explain how the lines on the graph and the break-even point would change if:
    1. The selling price per unit decreased
    2. Fixed cost increased throughout the entire range of activity portrayed on the graph.
    3. Variable cost per unit increased
  2. Explain how the shift in the sales mix could result in both a higher breakeven point and a lower net income.
  3. Summarize what is meant by a products contribution margin ratio also explain how it is useful in planning business operations.

 

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