A CVP graph.as illustrated below, is a useful tool for showing relationships between an organization's costs, volume, and profits:

6 1 7 U 2 Required: 1. Identify the numbered components in the CVP graph. 2. State the effect of each of the following actions on line 3, line 9, and the break-even point. For line 3 and line 9. state whether the action will cause the line to Remain unchanged. Shift upward. Shift downward. Have a steeper slope (i.e., rotate upward). Have a flatter slope (i.e., rotate downward). Shift upward and have a steeper slope. Shift upward and have a flatter slope. Shift downward and have a steeper slope. Shift downward and have a flatter slope. In the case of the break-even point, state whether the action will cause the break-even point to Remain unchanged. Increase. Decrease. Probably change, but the direction is uncertain. Treat each case independently. Example: Fixed costs are decreased by $90,000 each period. Answer (see choices above): Line 3: Shift downward. Line 9: Remain unchanged. Break-even point: Decrease. The unit selling price increases from $100 to $110. b. The per unit variable costs decrease from $40 to $36. c. The total fixed costs increase by $80,000. Two thousand more units are sold during the period than were budgeted. Due to paying salespeople a commission rather than a flat salary, fixed costs decrease by $21,000 per period, and unit variable costs increase by $6. As a result of an increase in the cost of materials, both unit variable costs and the selling price T. increase by $6. Advertising costs increase by $50,000 per period, but unfortunately the number of units sold 8. does not change. h, Upgrades to manufacturing equipment increase fixed costs by $40,000 per period, but variable costs per unit decrease by $2 per unit. a. PRESS 4. any an e. we