Example 6 – Chapter 8 CVP Analysis – producing in order of CS Ratio

Hello everyone,

In the extra question in example 6 of Chapter 8 where we have to construct a table showing the cumulative sales and profits aren’t we assuming that the budget is the maximum we can produce and sell? Wouldnt I otherwise allocate all my resources to the product with the highest CS Ratio?

In addition to this question, isnt it true that the CS Ratio is correlated to the slope of my graph? That is to say, if I could produce more of product P my graph would be “longer”, i.e it would be extended with the same slope? Similarly if I produce less of P, the slope would be “shorter” and my graph for C and V would shift parallel downwards? Is this true?

Thanks in advance!