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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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In the cost-volume-profit graph,

  1. a. the break-even point is found where the total revenue curve crosses the x-axis.
  2. b. the area of profit is to the left of the break-even point.
  3. c. the area of loss cannot be determined.
  4. d. both the total revenue curve and the total cost curve appear.
  5. e. neither the total revenue curve nor the total cost curve appear.

To determine

Identify the correct statement with respect to cost-volume-profit graph.

Explanation

Cost-Volume-Profit Graph:

CVP graph establishes the relation between cost, volume and profit of the company. The CVP graph depicts the break-even point at the intersection of cost and revenue line.

d.

The CVP graph depicts the relation between total cost and total revenue line to identify the break-even point. Hence, option d is correct.

a.

The break-even point is found where total cost line intersects total revenue line...

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