Lotts Company produces and sells one product. The selling price is $10, and the unit variable cost is $6. Total fixed cost is $10,000.
Required:
1. Prepare a CVP graph with “Units Sold” as the horizontal axis and “$ Profit” as the vertical axis. Label the break-even point on the horizontal axis.
2. Prepare CVP graphs for each of the following independent scenarios: (a) Fixed cost increases by $5,000, (b) Unit variable cost increases to $7, (c) Unit selling price increases to $12, and (d) Fixed cost increases by $5,000 and unit variable cost is $7.