The point where the sales line and the total costs line intersect on the cost-volume-profit chart represents:
A) the maximum possible operating loss
B) the maximum possible operating income
C) the total fixed costs
D) the break-even point

Question

Quizplus · Accepted Answer

The point where the sales line and the total costs line intersect on the cost-volume-profit chart represents the break-even point. This is the point where the total revenue equals the total cost, and the company is not making a profit or a loss. Therefore, option D is the correct answer. Option A is incorrect because the break-even point is the point where there is no operating loss. Option B is incorrect because the maximum possible operating income can occur at a point above the break-even point. Option C is incorrect because it represents only the fixed costs and not the entire cost structure.

The Point Where the Sales Line and the Total Costs