Use the Graphical Approach to CVP Analysis to Solve the Following

question 52

Essay

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:

Gestalt Principle

A theory in psychology that proposes the human brain sees objects as whole forms rather than as a collection of parts.

Proximity

The state of being close to something or someone in distance or relationship.

Organize Stimuli

The process of receiving, categorizing, and interpreting sensory information from the environment.

Visual Cliff

An experimental apparatus designed to test the depth perception and fear of heights in infants and young animals.