Profit-Volume Chart
For the coming year, Loudermilk Inc. anticipates fixed costs of $600,000, a unit variable cost of $75, and a unit selling price of $125. The maximum sales within the relevant range are $2,500,000.
a. Determine the maximum possible operating loss. $
b. Compute the maximum possible operating profit. $
c. Construct a profit-volume chart on paper. Indicate whether each of the following levels of sales is in the operating profit area, operating loss area, or at the break-even point
4,800 units
8,000 units
12,000 units
16,000 units
20,000 units
d. Estimate the break-even sales (units) by using the profit-volume chart constructed in part (c).