Cost Behavior and Cost-Volume-Profit Analysis
Review the three components in the background material to answer the questions and make computations relating to cost behavior and break-even analysis.
Ten Short-Answer Questions
Name and describe two major behavior patterns. What if a cost has characteristics of both patterns?
What is meant by the term break-even point?
What are two ways in which the break-even point can be expressed?
What is the relevant range?
What is the formula for calculating the break-even point in sales revenue?
What formula is used to solve for the break-even point in units?
How can the break-even formula be altered to calculate the number of units that must be sold to achieve a desired level of income? Show the formula and explain.
Why might a business wish to lower its break-even point? How would it go about lowering the break-even point?
What effect would you expect the mechanization and automation of production processes to have on the break-even point?
Describe three ideas that can lower the break-even point and include a simple example with numbers.
Real World Example
Review the background material and do some research to find a real world example where cost-volume-profit analysis was applied. Include financial information. Describe the situation and the results.
Write 35 sentences for each question.
Write an essay (300500 words).
Show sources when appropriate and APA format is suggested, but not required.
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