Question

The point where the sales line and the total costs line intersect on the cost-volume-profit chart represents the: a.maximum possible operating loss. b.point that total sales equals total costs. c.total fixed costs. d.maximum possible operating income.

Answer 1

Answer: b.point that total sales equals total costs

Step-by-step explanation:

The Cost-Volume-Profit chart shows the relationship between total costs, volume of goods produced, sales and profit. This chart is very useful as it can show the effect that a change in one variable can have on the others.

The point where the sales line and the total costs line intersect is the point where total sales equal total costs. This point is the break-even point and after this point the company begins to make profits but before this point, the company is making losses.