**LO1 **
| Explain how changes in activity affect contribution margin and net operating income. |

**LO2 **
| Prepare and interpret a cost-volume-profit (CVP) graph and a profit graph. |

**LO3 **
| Use the contribution margin ratio (CM ratio) to compute changes in contribution margin and net operating income resulting from changes in sales volume. |

**LO4 **
| Show the effects on contribution margin of changes in variable costs, fixed costs, selling price, and volume. |

**LO5 **
| Determine the level of sales needed to achieve a desired target profit. |

**LO6 **
| Determine the break-even point. |

**LO7 **
| Compute the margin of safety and explain its significance. |

**LO8 **
| Compute the degree of operating leverage at a particular level of sales and explain how it can be used to predict changes in net operating income. |

**LO9 **
| Compute the break-even point for a multiproduct company and explain the effects of shifts in the sales mix on contribution margin and the break-even point. |