CVP Graph

Which of the following statements is correct with regard to a CVP graph?

• A CVP graph shows the maximum possible profit.

• A CVP graph shows the break-even point as the intersection of the total sales revenue line and the total expense line.

• A CVP graph assumes that total expense varies in direct proportion to unit sales.

• A CVP graph shows the operating leverage as the gap between total sales revenue and total expense at the actual level of sales.

1

• Dollars

• Volume of Output

• Total Expense Line

• Variable Expense Area

2

• Dollars

• Volume of Output

• Total Expense Line

• Variable Expense Area

3

• Dollars

• Volume of Output

• Total Expense Line

• Variable Expense Area

4

• Dollars

• Volume of Output

• Total Expense Line

• Variable Expense Area

5

• Fixed Expense Area

• Break-even Point

• Loss Area

• Profit Area

6

• Fixed Expense Area

• Break-even Point

• Loss Area

• Profit Area

7

• Fixed Expense Area

• Break-even Point

• Loss Area

• Profit Area

8

• Fixed Expense Area

• Break-even Point

• Loss Area

• Profit Area

9

• Break-even Point

• Loss Area

• Profit Area

• Sales Line