How do you leverage the information obtained through cost volume profit (CVP) analysis to determine the goods and services provided to consumers? Please justify your response.
The following resource may help you visualize how changes and input variables affect the profit and loss scenario:
Probem
| Units | Revenues | Total Cost | Fixed Cost | Selling Price | $70 | |
| 0 | $0 | $350,000 | $350,000 | Variable Cost | $35 | |
| 1000 | $70,000 | $385,000 | $350,000 | Fixed Cost | $350,000 | |
| 2000 | $140,000 | $420,000 | $350,000 | |||
| 3000 | $210,000 | $455,000 | $350,000 | BEP (units) | 10000 | |
| 4000 | $280,000 | $490,000 | $350,000 | BEP (dollars) | $700,000 | |
| 5000 | $350,000 | $525,000 | $350,000 | |||
| 6000 | $420,000 | $560,000 | $350,000 | |||
| 7000 | $490,000 | $595,000 | $350,000 | |||
| 8000 | $560,000 | $630,000 | $350,000 | |||
| 9000 | $630,000 | $665,000 | $350,000 | |||
| 10000 | $700,000 | $700,000 | $350,000 | |||
| 11000 | $770,000 | $735,000 | $350,000 | |||
| 12000 | $840,000 | $770,000 | $350,000 | |||
| 13000 | $910,000 | $805,000 | $350,000 | |||
| 14000 | $980,000 | $840,000 | $350,000 | |||
| 15000 | $1,050,000 | $875,000 | $350,000 | |||
| 16000 | $1,120,000 | $910,000 | $350,000 | |||
| 17000 | $1,190,000 | $945,000 | $350,000 | |||
| 18000 | $1,260,000 | $980,000 | $350,000 | |||
| 19000 | $1,330,000 | $1,015,000 | $350,000 | |||
| Instructions: This model was designed to allow you the opportunity to see how changes in "selling price", "variable cost", and / or "fixed cost" graphically effect the CVP graph. The breakeven point is where the orange and blue lines intersect. To the left of the breakeven point represents a loss because the costs exceed the revenues. To the right of the breakeven point represents a profit because the revenues exceed the costs. | ||||||
Cost Volume Profit
Revenues 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 11000 12000 13000 14000 15000 16000 17000 18000 19000 0 70000 140000 210000 280000 350000 420000 490000 560000 630000 700000 770000 840000 910000 980000 1050000 1120000 1190000 1260000 1330000 Total Cost 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 11000 12000 13000 14000 15000 16000 17000 18000 19000 350000 385000 420000 455000 490000 525000 560000 595000 630000 665000 700000 735000 770000 805000 840000 875000 910000 945000 980000 1015000 Fixed Cost 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 11000 12000 13000 14000 15000 16000 17000 18000 19000 350000 350000 350000 350000 350000 350000 350000 350000 350000 350000 350000 350000 350000 350000 350000 350000 350000 350000 350000 350000
Units
Cost
Data
| SP | VC | FC |
| $50 | $25 | $300,000 |
| $60 | $30 | $325,000 |
| $70 | $35 | $350,000 |