When drawing a cost-volume-profit graph,how are the axes labeled?
A) The horizontal axis would be labeled with dollars (of cost or revenue), while the vertical axis would be labeled with number of units (volume or activity).
B) The horizontal axis would be labeled with dollars (of total fixed costs), while the vertical axis would be labeled with dollars (of total variable costs).
C) The horizontal axis would be labeled with number of units (volume or activity), while the vertical axis would be labeled with dollars (of cost or revenue).
D) None of these answers is correct.

Question

Quizplus · Accepted Answer

The horizontal axis represents the volume or activity, while the vertical axis represents the cost or revenue, which is measured in dollars. Therefore, the correct labeling for the axes would be as follows: the horizontal axis would be labeled with number of units (volume or activity), while the vertical axis would be labeled with dollars (of cost or revenue). Option A is close, but it incorrectly suggests labeling the horizontal axis with dollars instead of units. Option B's labeling is incorrect as it suggests labeling the horizontal axis with total fixed costs instead of units and the vertical axis with total variable costs instead of revenue/costs. Option D is incorrect because there must be labeling on the axes to represent the information being presented.

When Drawing a Cost-Volume-Profit Graph,how Are the Axes Labeled