2. Instructions for Posting

a. Based on the results for your cvp analysis:

1. Explain the results for the break-even point, margin of safety ratio, and cvp income statement

2 Would you make the changes recommended by Hakim?

b. explain and compare the per unit behavior and the total cost behavior for fixed costs.

c. explain relevant range:

1. explain what the relevant range is.

2. explain and provide an example when the straight-line relationship does not exist for fixed costs.

service to attract more business that will add $3 in variable costs to Tahoe's current variable costs of $15. Hakim is also proposing that a 10% room rate increase (from S60 to $66 per room) will produce an increase in room rentals from 3,500 to 4,000 units. Fixed costs will remain at $126,000 for Tahoe. Compute and prepare a cup analysis: Current Break-even point in units 2,800 After Changes 2,625 Increase/Decrease Decrease 175 units Margin of Safety Ratio 20.0% 34.4% Increase 14.38% Prepare the CVP Income Statement (Totals) CVP Income Statement: Current Sales revenes $210,000 Less: Variable costs ($52,500) Contribution margin $157,500 Less: Fixed costs ($126,000) Profit/Loss $31.500 After Changes $264,000 ($72,000) $192,000 ($126,000) $66,000 Increase/Decrease to Profit/Loss Increase $54000 Increase $19500 Increase $34500 No Change Increase $34500