Posted: April 24th, 2025

Leveraging Cost Volume Profit Analysis

How do you leverage the information obtained through cost volume profit (CVP) analysis to determine the goods and services provided to consumers? Please justify your response.

The following resource may help you visualize how changes and input variables affect the profit and loss scenario:

Probem

Units

Revenues

Total

Cost

Fixed Cost Selling Price $7

0 0

$0 $35

0,000 $350,000 Variable Cost

$35
1000 $70

,000 $385,000

$350,000

Fixed Cost
$350,000
2000 $140,000 $420,000

$350,000
3000 $210,000 $455,000

$350,000

BEP (units) 10000 4000 $280,000 $490,000

$350,000

BEP (dollars) $700,000 5000

$350,000

$525,000

$350,000
6000

$420,000

$560,000

$350,000
7000

$490,000

$595,000

$350,000
8000

$560,000

$630,000

$350,000
9000

$630,000

$665,000

$350,000
10000
$700,000
$700,000
$350,000
11000 $770,000 $735,000

$350,000
12000 $840,000

$770,000
$350,000
13000 $910,000 $805,000

$350,000
14000 $980,000

$840,000
$350,000
15000 $1,050,000 $875,000

$350,000
16000 $1,120,000

$910,000
$350,000
17000 $1,190,000 $945,000

$350,000
18000 $1,260,000

$980,000
$350,000
19000 $1,330,000 $1,015,000

$350,000
Instructions: This model was designed to allow you the opportunity to see how changes in “selling price”, “variable cost”, and / or “fixed cost” graphically effect the CVP graph. The breakeven point is where the orange and blue lines intersect. To the left of the breakeven point represents a loss because the costs exceed the revenues. To the right of the breakeven point represents a profit because the revenues exceed the costs.

Cost Volume Profit

Revenues 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 11000 12000 13000 14000 15000 16000 17000 18000 19000 0 70000 140000 210000 280000 350000 420000 490000 560000 630000 700000 770000 840000 910000 980000 1050000 1120000 1190000 1260000 1330000

Total Cost

0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 11000 12000 13000 14000 15000 16000 17000 18000 19000 350000 385000 420000 455000 490000 525000 560000 595000 630000 665000 700000 735000 770000 805000 840000 875000 910000 945000 980000 1015000 Fixed Cost 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 11000 12000 13000 14000 15000 16000 17000 18000 19000 350000 350000 350000 350000 350000 350000 350000 350000 350000 350000 350000 350000 350000 350000 350000 350000 350000 350000 350000 350000

Units

Cost

Data

0,000

$30

$70
$35
$350,000

SP	VC	FC
$50	$25		$30
$60	$325,000