M3-13.Profit-Volume Graph: Identification and SensitivityAnalysis

Atypical profit-volume graph follows.

A B

C

D F E

Required

a.Identify each of the following:

1.AreaBDC

2.AreaDEF

3.PointD

4.LineAC

5.LineBC

6.LineEF

b.Indicate the effect of each of the following on lineCFand the break-even point:

1.An increase in the unit selling price

2.An increase in the variable costs per unit

3.Adecrease in fixed costs

4.An increase in fixed costs and a decrease in the unit selling price

5.Adecrease in fixed costs and an increase in the variable costs per unit