Data extracted from the accounting information system of TXC Corporation produced the following graph. The equation of the dashed line is y = $25x; the equation of the solid line is y = $200 + $5x. The vertical ("y") axis shows:

Question

Quizplus · Accepted Answer

The graph shows the relationship between revenue (y-axis) and the level of activity (x-axis) in dollars. Therefore, the best choice for the vertical axis is dollars (option A). The graph does not provide information on contribution margin or total profit. The solid line represents the total revenue (including fixed and variable costs) while the dashed line represents the variable cost component of the revenue.

Data Extracted from the Accounting Information System of TXC Corporation