2021-12-22T12:44:09+00:00

# CVP graph

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# CVP graph

E5-4 Ewing Company estimates that variable costs will be 50% of sales, and fixed costs will total \$800,000. The selling price of the product is \$4.

Instructions
a. Prepare a CVP graph, assuming maximum sales of \$3,200,000. (Note: Use
\$400,000 increments for sales and costs and 100,000 increments for units.)
b. Compute the break-even point in (1) units and (2) dollars.
c. Compute the margin of safety in (1) dollars and (2) as a ratio, assuming actual
sales are \$2 million.
Hint:
Prepare a CVP graph and compute break‐even point and margin of safety.
( Study Objective 6 Study Objective 7).

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