Which of the following is a characteristic of the cost-volume-profit graph?
A)It is hard to interpret.
B)It reveals how costs change as sales volume remains the same.
C)It cannot be plotted if the break-even point is known.
D)It shows the relationship among cost, volume, and profits.

Question

Quizplus · Accepted Answer

The cost-volume-profit graph shows the relationship among cost, volume, and profits, making it a useful tool in decision-making and analyzing the financial performance of a business. Option A is incorrect as it should be easy to interpret, as long as the user understands the concepts of CVP analysis. Option B is incorrect as the graph shows how costs and profits change as sales volume changes, not as sales volume remains constant. Option C is incorrect as the break-even point is an important component of the CVP graph, and it can be plotted based on this information.

Which of the Following Is a Characteristic of the Cost-Volume-Profit