Use the Graphical Approach to CVP Analysis to Solve the Following

question 27

Short Answer

Use the graphical approach to CVP analysis to solve the following problem.
A small manufacturing operation can produce up to 250 units per week of a product that it sells for $20 per unit. The variable cost per unit is $12, and the fixed costs per week are $1200.
a) How many units must the firm sell per week to break even?
b) Determine the firm's weekly profit or loss if it sells:
(i) 120 units per week (ii) 250 units per week
c) At what level of sales will the net income be $400 per week?

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Definitions:

Trade Name

The commercial name under which a business operates and is known to the public, distinct from the business's legal name.

Collateral

An asset pledged by a borrower to secure a loan, which can be seized by the lender if the loan is defaulted on.

Security Interest

A legal claim or lien on collateral that has been pledged, usually to secure repayment of a loan.

Attachment

A legal process in which a court designates property of the defendant to be seized or secured to satisfy a potential judgment.