Question

For the coming year, Cleves Company anticipates a unit selling price of $78, a unit variable cost of $39, and fixed costs of $257,400.

3. Construct a cost-volume-profit chart, assuming maximum sales of 13,200 units within the relevant range. From your chart, indicate whether each of the following sales levels would produce a profit, a loss, or break-even.

$717,600

$647,400

$514,800

$390,000

$312,000

Determine the probable income (loss) from operations if sales total 10,600 units. If required, use the minus sign to indicate a loss. $

Answer 1

I have constructed the chart in excel, here the X-axis will be Volume and Y- axis will be Cost.

The point at which the sales and the revenue meets is the break-even point i.e., at (6600,514800). There will be profit if we make sales more than this point and loss if we make lesser sales.

Sales	Profit or loss or break even
717600	Profit
647400	Profit
514800	Break-even
390000	Loss
312000	Loss

The probable income for 10600 units will be 156000(78*10600-(39*10600+257400))