APPLY THE CONCEPTS: Calculate the break-even point in sales dollars for Clapton Digital Further analysis of Clapton Digital's fixed costs revealed that the company actually faces annual fixed overhead costs of $9,800 and annual fixed selling and administrative costs of $4,200. Variable cost estimates are correct direct materials cost, $4.80 per unit; direct labor costs, $6.00 per unit; and variable overhead costs, $1.20 per unit. At this time, the selling price of $40 will not change. Complete the following formulas for the revised fixed costs. Enter the ratio as a percentage. Contribution Margin per_ Unit Contribution Margitn Ratio Now complete the formulas for (1) the break-even point in sales dollars and (2) the units sold at the break-even point. To calculate this, divide the break-even point in sales dollars by the unit selling price Break-Even Point in Sales Dollars Units Sold at Break-Even Point Assume that the number of units that Clapton sold exceeded the break-even point by one (1) How much would operating income be? units What would operating income be if the units sold exceeded the break-even point by five (5) units? The Cost-Volume-Profit Graph The CVP graph shows the relationships among cost, volume, and profits. The X- (horizontal) axis is the total units, and the Y- (vertical) axis is the dollars (sales or costs). The intersection of these two axes, the origin, is where both units and dollars are zero. There are two lines to be plotted on the graph: the sales line and the total costs line. The sales line crosses the Y-axis where sales dollars ane variable rate. The slope of the sales line is equal to the the Y-axis at point where The slope of any line is the Recall that total fixed costs regardless of the number of units sold, even if zero units are sold. Therefore, the total costs line will cross Therefore, the slope of the total costs line is equal to the dollars. As each additional unit is sold, the total costs will increase by The break-even point exists at the