Professional Documents
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Cost-Volume-Profit Analysis
ANSWERS TO REVIEW QUESTIONS
7-1
Break-evenpoint
fixed expenses
unit contribution margin
0
in units expense
in units expenses
salesprice
c. In the graphical approach, sales revenue and total expenses are graphed. The
break-even point occurs at the intersection of the total revenue and total expense
lines.
McGraw-Hill/Irwin
Managerial Accounting, 8/e
7-7
7-8
When the sales price and unit variable cost increase by the same amount, the unit
contribution margin remains unchanged. Therefore, the firm's break-even point
remains the same.
7-9
The fixed annual donation will offset some of the museum's fixed expenses. The
reduction in net fixed expenses will reduce the museum's break-even point.
7-10
A profit-volume graph shows the profit to be earned at each level of sales volume.
7-11
McGraw-Hill/Irwin
7-2