When interpreting a CVP graph which of the following is NOT correct?
A) When sales are below the breakeven intersection the company incurs a loss.
B) The breakeven point is where the total revenue line meets the fixed cost line.
C) The anticipated profit or loss at any given level of sales is measured by the vertical distance between the total revenue line and the total expense line.
D) The total revenue line starts at the origin.

Question

Quizplus · Accepted Answer

The breakeven point is where the total revenue line intersects the total expense line, not the fixed cost line. Fixed costs are part of total expenses, but total expenses also include variable costs.

When Interpreting a CVP Graph Which of the Following Is