PLEASE EXPLAIN STEP BY STEP

Cost-Volume-Profit Graph: Identification and Sensitivity Analysis A typical cost-volume-profit graph is presented below.

Required a. Identify each of the following:

1.	Line OF	AnswerBreak-even unit sales volumeContribution marginFixed costsLoss areaProfit areaTotal costsTotal revenueTotal variable costsVariable costs
2.	Line OR	AnswerBreak-even unit sales volumeContribution marginFixed costsLoss areaProfit areaTotal costsTotal revenueTotal variable costsVariable costs
3.	Line CC	AnswerBreak-even unit sales volumeContribution marginFixed costsLoss areaProfit areaTotal costsTotal revenueTotal variable costsVariable costs
4.	The difference between lines OF and OV at any given number of unit sales	AnswerBreak-even unit sales volumeContribution marginFixed costsLoss areaProfit areaTotal costsTotal revenueTotal variable costsVariable costs
5.	The difference between lines CC and OF at any given number of unit sales	AnswerBreak-even unit sales volumeContribution marginFixed costsLoss areaProfit areaTotal costsTotal revenueTotal variable costsVariable costs
6.	The difference between lines CC and OV at any given number of unit sales	AnswerBreak-even unit sales volumeContribution marginFixed costsLoss areaProfit areaTotal costsTotal revenueTotal variable costsVariable costs
7.	The difference between lines OR and OF at any given number of unit sales	AnswerBreak-even unit sales volumeContribution marginFixed costsLoss areaProfit areaTotal costsTotal revenueTotal variable costsVariable costs
8.	Point X	AnswerBreak-even unit sales volumeContribution marginFixed costsLoss areaProfit areaTotal costsTotal revenueTotal variable costsVariable costs
9.	Area CYO	AnswerBreak-even unit sales volumeContribution marginFixed costsLoss areaProfit areaTotal costsTotal revenueTotal variable costsVariable costs
10.	Area RCY	AnswerBreak-even unit sales volumeContribution marginFixed costsLoss areaProfit areaTotal costsTotal revenueTotal variable costsVariable costs

b. Indicate the effect of each of the following independent events on lines CC, OR, and the break-even point:

		Line CC	Line OR	Break-Even Point
1.	A decrease in fixed costs	AnswerDecrease slopeIncrease slopeShift downwardShift downward and decrease slopeShift upwardShift upward and increase slopeNo change	AnswerDecrease slopeIncrease slopeNo change	AnswerShift left (decrease)Shift right (increase)
2.	An increase in unit selling price	AnswerDecrease slopeIncrease slopeShift downwardShift downward and decrease slopeShift upwardShift upward and increase slopeNo change	AnswerDecrease slopeIncrease slopeNo change	AnswerShift left (decrease)Shift right (increase)
3.	An increase in variable costs per unit	AnswerDecrease slopeIncrease slopeShift downwardShift downward and decrease slopeShift upwardShift upward and increase slopeNo change	AnswerDecrease slopeIncrease slopeNo change	AnswerShift left (decrease)Shift right (increase)
4.	An incrase in fixed costs and a decrease in the unit selling price	AnswerDecrease slopeIncrease slopeShift downwardShift downward and decrease slopeShift upwardShift upward and increase slopeNo change	AnswerDecrease slopeIncrease slopeNo change	AnswerShift left (decrease)Shift right (increase)
5.	A decrease in fixed costs and a decrease in the unit variable costs	AnswerDecrease slopeIncrease slopeShift downwardShift downward and decrease slopeShift upwardShift upward and increase slopeNo change	AnswerDecrease slopeIncrease slopeNo change	AnswerShift left (decrease)Shift right (increase)