On a cost-volume-profit graph, the break-even point is where
A) the revenue line intersects the profit line.
B) the revenue line intersects the total cost line.
C) the fixed cost line intersects the variable cost line.
D) the contribution margin line intersects the fixed cost line.
E) All of these are correct.

Question

Quizplus · Accepted Answer

The break-even point is the point where total revenue equals total cost. Therefore, it is where the revenue line intersects the total cost line. The profit line does not necessarily intersect the break-even point, as profits can exist both above and below the break-even point. The fixed cost line intersecting the variable cost line is not a relevant factor in determining the break-even point. The contribution margin line intersecting the fixed cost line is also not the point of the break-even because it does not take into account total cost. Therefore, only B is the correct choice.

On a Cost-Volume-Profit Graph, the Break-Even Point Is Where