APPLY THE CONCEPTS: Use the CVP graph to analyze the effects of changes in price and costs Graph the following on your own paper. At the original position, the break-even point in sales dollars is $24,000 at 500 units. The fixed costs are $8,000. Assume the slope of the sales line is equal to the selling price. When the two points of the sales line are at the origin and the break-even point, you see that the slope of the line is $48, which means that the selling price is $ When the two points of the total costs line are at the origin and the break-even point, you see that the slope of the line is $32.00, which means that the variable cost per unit is $ Leave the break-even point (x) at its original position. Use it as a reference point to answer the following questions. Analyze the scenarios by sliding the points on the lines to get the slope desired. Recall that the new break-even point for each scenario exists where the sales and total costs lines intersect. Compare it to the original break-even point (x). (You may want to put the lines back to their original position for each scenario.) Each scenario should be considered independently. 1. The company purchases a fixed asset and increases fixed costs by $2,000. Variable costs remain the same, which means that the slope does not change. This will cause the break-even point to move to the right v , which means that break-even point in sales dollars increases v 2. A new supplier can provide a product of equal quality at $4.00 per unit less than the current direct materials cost. If the new supplier is used, the slope of the total costs line will be $ and the break-even point in sales dollars decreases v 3. Market research shows that a price increase will decrease the number of units sold. A price increase will cause the slope of the sales line to increase v . But internal analysis shows that this price increase will cause the break-even point in sales to shift to the left v , which means that fewer v units will need to be sold to break even