Use the Graphical Approach to CVP Analysis to Solve the Following

question 82

Short Answer

Use the graphical approach to CVP analysis to solve the following problem.
Home Security Systems Inc. assembles and packages home security systems from brand-name components. Its basic home security system is sold to customers who prefer to install the system themselves in their own home. Each system is assembled from components costing $1400 per system and sells for $2,000. Labour costs for assembly are $100 per system. This product line's share of overhead costs is $10,000 per month.
a) How many basic security systems must be sold each month to break even on this product line?
b) What will be the profit or loss for a month in which 15 basic home security systems are sold?

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Definitions:

UCS

Unconditioned Stimulus (UCS) is a stimulus that naturally and automatically triggers a response without any prior learning in classical conditioning.

Token Economy

A behavior modification system that uses tokens as a form of reinforcement or reward for desired behaviors, which can be exchanged for privileges or treats.

Memorize

The process of committing something to memory or learning it by heart.

Applied Behavior Analysis

A scientific discipline concerned with applying techniques based on behaviorist principles to modify behavior, particularly in individuals with autism.