A profit-volume graph shows the impact on operating profit from changes in the output level.

Question

Quizplus · Accepted Answer

A profit-volume graph is a graphical representation of how changes in different levels of output affect the operating profit of a business. It shows the relationship between the volume of output produced and the resulting operating profit, with output levels typically shown on the x-axis and operating profit represented on the y-axis. As output increases, fixed and variable costs tend to rise, and so too does revenue. The profit-volume graph helps businesses to identify profitable output levels and make operational decisions accordingly.

A Profit-Volume Graph Shows the Impact on Operating Profit from Changes