APPLY THE CONCEPTS: Effect of Changes to Sales Price, Variable Costs and Fixed Costs

Now consider each of the following scenarios for Logan Manufacturing. Calculate the contribution margin (CM) per unit, rounded to nearest dollar, and the new break-even point in units, rounded to the nearest whole unit, for each scenario separately.

APPLY THE CONCEPTS: The Prot-Volume Graph A prot-volume graph helps managers to visualize the relationship between prots and units sold. The data for Logan Manufacturing has been used to construct the prot-volume graph below. The purple poinls (diamond symbols) plot the profit line. The operating loss is the shaded area bordered by the red points (cross symbols). The operating prot is the area bounded by the green points (triangle symbols). Choose the correct prot-volume graph for Logan Manufacturing 7 PROFIIIDoIIIrII \"mm . Over. FM\" Area 7500 5am ' Openusomn 25m . D humming : .00 -25m Jim .|nnw.......... nmmmunuim WWW-=5 WW PROFIT IIlulllrII IIDW 75m 25m -zsnu . -5nm .15m \fScenario 1 Scenario 2 Scenario 3 Logan will dispose of a _ _ _ _ _ _ _ After some extenswe market research, Logan Logan has been experiencmg quality problems With a machine In the factory. The has determined that a sales price increase of materials supplier. Changing suppliers will improve depreciation on that $2 per unit will not affect the sales volume the quality of the product but will cause direct equipment is $500 per _ _ _ _ _ _ _ th and Will be effective Immediately. materials costs to increase by $1 per unit. mon . CM per unit: $|:] CM per unit: $l:l CM per unit: E Break-even units: Break-even units: units Break-even units: units