Use the Graphical Approach to CVP Analysis to Solve the Following

question 8

Short Answer

Use the graphical approach to CVP analysis to solve the following problem.
Canada Bagel Company manufactures packages of bagels that it sells for $2.50. The variable costs per package are $1.00.
a) To just break even, how many packages of bagels must be sold per month if the fixed costs are $60,000 per month?
b) What must unit sales be in order to have a profit of $7,500 per month?

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Definitions:

Prepaid Expenses

Expenses paid in advance and recorded as assets until they are actually used or consumed.

Unearned Revenues

Represents income received by a company for goods or services that are yet to be delivered or performed.

Accrued Revenues

Income earned during an accounting period but not yet received or recorded at the statement date, representing future cash receipts.

Annual Depreciation

The amount of depreciation expense allocated for a fixed asset in one year, based on the asset's useful life and cost.