Questions:
1. Why might a multiple-product firm choose to calculate just overall break-even revenue rather than the break-even quantity by product?
2. How do income taxes affect the break-even point and CVP analysis?
3. Explain how a change in sales mix can change a company's break-even point.
4. Define the term margin of safety. Explain what is meant by the term operating leverage. What impact does an increase in the margin of safety have on risk? What impact does an increase in leverage have on risk?
5. Why does the activity-based costing approach to CVP analysis offer more insight than the conventional approach does?