Data extracted from the accounting information system of Turner Corporation produced the following graph. The equation of the dashed line is y = $25x; the equation of the solid line is y = $200 + $5x. The area to the right of the point where the two lines intersect, where the dashed line is above the solid line, shows where TXC:
A) Operates at a loss
B) Operates at a profit
C) Breaks even if product mix remains constant
D) Cannot be determined

Question

Data extracted from the accounting information system of Turner Corporation produced the following graph. The equation of the dashed line is y = $25x; the equation of the solid line is y = $200 + $5x.  The area to the right of the point where the two lines intersect, where the dashed line is above the solid line, shows where TXC:
A) Operates at a loss 
B) Operates at a profit 
C) Breaks even if product mix remains constant 
D) Cannot be determined

Quizplus · Accepted Answer

The point where the two lines intersect represents the break-even point. Since the dashed line is above the solid line to the right of the break-even point, this indicates that the revenue from sales is greater than the total costs incurred by TXC, resulting in a profit.

Data Extracted from the Accounting Information System of Turner Corporation