Figure 8-6
The following diagram is a cost-volume-profit graph for a manufacturing company:
-Refer to Figure 8-6. Select the answer that best describes the labeled item on the diagram.
A)Area CDE represents the area of net loss.
B)Line AC graphs total fixed costs.
C)Point D represents the point at which the contribution margin per unit increases.
D)Line AC graphs total costs.

Question

Figure 8-6
The following diagram is a cost-volume-profit graph for a manufacturing company: 
-Refer to Figure 8-6. Select the answer that best describes the labeled item on the diagram.
A)Area CDE represents the area of net loss. 
B)Line AC graphs total fixed costs. 
C)Point D represents the point at which the contribution margin per unit increases. 
D)Line AC graphs total costs.

Quizplus · Accepted Answer

Line AC represents total costs, which includes both fixed and variable costs. Only D is a correct statement according to the diagram. Area CDE represents the area of operating losses, not net losses. Point D represents the breakeven point where the contribution margin per unit equals total fixed costs.

Figure 8-6 The Following Diagram Is a Cost-Volume-Profit Graph for a Manufacturing