Lotts Company produces and sells one product. The selling price is $10, and the unit variable cost is $6. Total fixed cost is $10,000.

Unless otherwise instructed, round all total dollar figures (e.g., sales, total contribution margin) to the nearest dollar, break even or target units to the nearest unit, and unit costs and unit contribution margins to the nearest cent. Round ratios to four significant digits.

For all the graphs below, the plus-marked line is total revenue, and the heavy solid line is total cost.

Required:

1. Of the four graphs below, choose the correct CVP graph for Lotts Company.

a.	b.
c.	d.

What is the break-even point in units?

2. Choose the correct CVP graph for each of the following independent scenarios:

a. Fixed cost increases by $5,000.

a.	b.
c.	d.

What is the break-even point in units?

b. Unit variable cost increases to $7.

a.	b.
c.	d.

What is the break-even point in units? Round your answer to the nearest whole unit.

c. Unit selling price increases to $12.

a.	b.
c.	d.

What is the break-even point in units? Round your answer to the nearest whole unit.

d. Fixed cost increases by $5,000 and unit variable cost is $7.

a.	b.
c.	d.

What is the break-even point in units?

Dollars $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 500 1,000 1,500 2,000 Units Sold 2,500 3,000 3,500 Dollars $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 0 500 1,000 1,500 2,000 2,500 Units Sold 3,000 3,500 4,000 Dollars $60,000- $50,000 $40,000 $30,000- $20,000 - $10,000 $0 0 500 1,000 1,500 2,000 Units Sold 2,500 3,000 3,500 4,000 Dollars $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 0 1,000 2,000 3,000 4,000 Units Sold 5,000 6,000 7,000 Dollars $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 500 1,000 1,500 2,000 Units Sold 2,500 3,000 3,500 Dollars $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 0 500 1,000 1,500 2,000 2,500 Units Sold 3,000 3,500 4,000 Dollars $60,000- $50,000 $40,000 $30,000- $20,000 - $10,000 $0 0 500 1,000 1,500 2,000 Units Sold 2,500 3,000 3,500 4,000 Dollars $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 0 1,000 2,000 3,000 4,000 Units Sold 5,000 6,000 7,000 Dollars $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 500 1,000 1,500 2,000 Units Sold 2,500 3,000 3,500 Dollars $50,000 $40,000 $30,000 $20,000 $10,000 $0 T 500 1,000 1,500 2,000 2,500 Units Sold 3,000 3,500 4,000 Dollars $60,000- $50,000 $40,000 $30,000- $20,000 - $10,000 $0 0 500 1,000 1,500 2,000 Units Sold 2,500 3,000 3,500 4,000 Dollars $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 0 1,000 2,000 3,000 4,000 Units Sold 5,000 6,000 7,000 Dollars $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 500 1,000 1,500 2,000 Units Sold 2,500 3,000 3,500 Dollars $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 0 500 1,000 1,500 2,000 2,500 Units Sold 3,000 3,500 4,000 Dollars $60,000- $50,000 $40,000 $30,000- $20,000 - $10,000 $0 0 500 1,000 1,500 2,000 Units Sold 2,500 3,000 3,500 4,000 Dollars $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 0 1,000 2,000 3,000 4,000 Units Sold 5,000 6,000 7,000 Dollars $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 500 1,000 1,500 2,000 Units Sold 2,500 3,000 3,500 Dollars $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 0 500 1,000 1,500 2,000 2,500 Units Sold 3,000 3,500 4,000 Dollars $60,000- $50,000 $40,000 $30,000- $20,000 - $10,000 $0 0 500 1,000 1,500 2,000 Units Sold 2,500 3,000 3,500 4,000 Dollars $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 0 1,000 2,000 3,000 4,000 Units Sold 5,000 6,000 7,000