It is misleading to call a cost-volume-profit graph a break-even graph.Why?
A) The graph reveals more information than the break-even point.
B) The graph does not show the break-even point.
C) The main purpose of the graph is to show the cost drivers for different activity levels.
D) The main purpose of the graph is to show the margin of safety.

Question

Quizplus · Accepted Answer

A cost-volume-profit graph not only shows the break-even point, but also provides additional information such as the levels of profit or loss for different levels of sales, the contribution margin per unit, and the level of sales needed to achieve a desired profit. Therefore, calling it a "break-even graph" would not accurately reflect the full scope of information conveyed by the graph.

It Is Misleading to Call a Cost-Volume-Profit Graph a Break-Even