This is the angle at which the sales line cuts the total cost line (Graphs 6.1 and 6.2). If the angle is large, the firm (or product) is earning profit at a high rate. If used in conjunction with the margin of safety, it indicates an extremely favourable condition. A small angle of incidence shows that although the firm (or the product) is making profit, it is being achieved under less favorable conditions, 6.4.4 MULTI-PRODUCT PROFIT GRAPH When a firm manufactures and sells more than het of varying profitability: a t29 CVP chart may be drawn to show the relative profitability of different products. This graph is known as 'Sequential profit graph' or 'Profit path chart'. The following steps are involved in drawing the graph: (a) The C/S ratio is determined for different products and products are arranged in order of the descending C/S ratio, i.e. the product showing the highest C/S ratio is shown first and so on; (b) A statement is prepared showing the cumulative sales and the cumulative profit; (c) Sales are plotted on horizontal axis; (d) Fixed cost is plotted on vertical axis below the horizontal axis; (e) Starting from the fixed cost point a profit path is drawn which terminates at the profit point reached by the last product; (f) The end of the profit path is connected with the fixed cost point. This line is called the total profit line; (g) The point of intersection between the total profit line and the total sale line is called the break-even point for a group of products. Example 6.4: A manufacturing company produces three products: P, Q and R. The following are the results for 2003. Product Sales (Rs.) Variable cost (Rs.) P 5000 2000 Q 3000 1800 R 2000 2500 Fixed Costs Rs. 2200 Prepare a marginal cost statement and calculate C/S ratio for the product. Draw a profit-graph of products and comment on the results