Managerial Accounting 14th Edition by Ray Garrison ,Eric Noreen ,Peter Brewer 4

Exercise 6

In response to a request from your immediate supervisor, you have prepared a CVP graph portraying the cost and revenue characteristics of your company's product and operations. Explain how the lines on the graph and the break-even point would change if (a) the selling price per unit decreased, ( b ) fixed cost increased throughout the entire range of activity portrayed on the graph, and ( c ) variable cost per unit increased.