Profit-volume chart
Using the data for Cabinet Inc. in Exercise 11-17, (a) determine the maximum possible operating loss, (b) compute the maximum possible income from operations, (c) construct a profit-volume chart, and (d) estimate the break-even sales (units) by using the profit-volume chart constructed in part (c).
Exercise 11-17
Cost-volume-profit chart
For the coming year, Cabinet Inc. anticipates fixed costs of $60,000, a unit variable cost of $70, and a unit selling price of $100. The maximum sales within the relevant range are $500,000.
a. Construct a cost-volume-profit chart.
b. Estimate the break-even sales (dollars) by using the cost-volume-profit chart constructed in part (a).
c. What is the main advantage of presenting the cost-volume-profit analysis in graphic form rather than equation form?
