Contemporary Engineering Economics 6th Edition by Chan Park

Exercise 5

The accompanying chart (Figure) shows the expected monthly profit or loss of Cypress Manufacturing Company within the range of its monthly practical operating capacity. Using
Figure P8.6

the information provided in the chart, answer the following questions.
(a) What is the company's break-even sales volume
(b) What is the company's marginal contribution rate
(c) What effect would a 5% decrease in selling price have on the break-even point in part (a)
(d) What effect would a 10% increase in fixed costs have on the marginal contribution rate in part (b)
(e) What effect would a 6% increase in variable costs have on the break-even point in part (a)
(f) If the chart also reflects $20,000 monthly depreciation expenses, compute the sales volume at the break-even point for cash costs.