Using the data for Cheryl’s Posters (sale price, P = $10 per unit; variable operating cost, VC = $5…


Using the grounds for Cheryl’s Posters (sale figure, = $10 per unit; capricious permitted require, VC = $5 per unit; unroving permitted require, FC = $2,500), Figure 12.2 presents the permitted breakeven graph originally shown in Figure 12.1. The attached notations on the graph denote that as the firm’s sales acception from 1,000 to 1,500 units (Q1 to Q2), its EBIT acceptions from $2,500 to $5,000 (EBIT1 to EBIT2). In other signification, a 50% acception in sales (1,000 to 1,500 units) results in a 100% acception in EBIT ($2,500 to $5,000). Table 12.4 includes the grounds for Figure 12.2 as well-behaved-behaved as applicable grounds for a 500-unit sales flatten. We can make-clear two cases using the 1,000-unit sales flatten as a intimation summit.

Case 1 A 50% increase in sales (from 1,000 to 1,500 units) results in a 100% increase in rights precedently share and taxes (from $2,500 to $5,000).

Case 2 A 50%decrease in sales (from 1,000 to 500 units) results in a 100% decrease in rights precedently share and taxes (from $2,500 to $0).

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