When graphing cost-volume-profit data on a CVP chart:Multiple ChoiceBoth profit and costs are plotted on the horizontal axis.Profit is plotted on the vertical axis; costs on the horizontal axis.Units are plotted on the horizontal axis; costs on the vertical axis.Both units and cost are plotted on the vertical axis.Data points always represent expected future points.
Question
When graphing cost-volume-profit data on a CVP chart:Multiple ChoiceBoth profit and costs are plotted on the horizontal axis.Profit is plotted on the vertical axis; costs on the horizontal axis.Units are plotted on the horizontal axis; costs on the vertical axis.Both units and cost are plotted on the vertical axis.Data points always represent expected future points.
Solution
The correct answer is: Units are plotted on the horizontal axis; costs on the vertical axis.
Here's why:
A Cost-Volume-Profit (CVP) chart is a graphical representation of the relationship between an organization's costs, its volume (units sold), and its profit.
-
On the horizontal axis, we plot the volume, which is the number of units sold. This is because as we move from left to right, the quantity of units sold increases.
-
On the vertical axis, we plot the costs and revenue. This is because as we move from bottom to top, the amount of costs and revenue increases.
-
The point where the total revenue line intersects the total cost line is the breakeven point. This is the point where the company neither makes a profit nor incurs a loss.
-
The area above the breakeven point represents profit, while the area below represents loss.
-
The slope of the total revenue line represents the selling price per unit, while the slope of the total cost line represents the variable cost per unit.
Therefore, the statement "Units are plotted on the horizontal axis; costs on the vertical axis" is correct.
Similar Questions
In the graph method of CVP analysis:Group of answer choicesthe total revenue line starts at the origin and the total costs line starts at the fixed intercept on the vertical axis.Both total cost and total revenue lines starts at the fixed intercept on the vertical axis.the total costs line starts at the origin and the total revenue line starts at the fixed intercept on the vertical axisthe breakeven point is at the fixed intercept on the vertical axis
A graph of unit volume and cost data is called a:Multiple ChoiceBreak-even diagram.Scatter diagram.Least-squares diagram.Step-wise diagram.Composite diagram.
The break-even point in a cost-volume-profit graph is always found:Multiple Choiceat 50% of full capacity.at the sales volume resulting in the lowest average unit cost.at the volume at which total revenue equals total variable costs.at the volume at which total revenue equals total fixed costs plus total variable costs.
Option Strategy – Profit & Loss Chart
Multiple Choice QuestionWhen preparing a scatter diagram, the estimated line of cost behavior is drawn on a scatter diagram to show the relation between:Multiple choice question.cost and unit volumevariable and fixed costslowest and highest point of activityfixed cost and unit volume
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.