Intermediate Shown below is a typical cost-volume-profit chart:

Required:

(a) Explain to a colleague who is not an accoun¬

tant the reasons for the change in result on this cost-volume-profit chart from a loss at point

(a) to a profit at point (b). (3 marks)

(b) Identify and critically examine the underlying assumptions of this type of cost-volume- profit analysis and consider whether such analyses are useful to the management of an organization.LO1

Transcribed Image Text:

Total revenue Volume (b) Total costs Variable costs