Q20-19RQ - Horngren'S Financial And Managerial Accounting

Question

On the CVP graph, where is the breakeven point shown? Why?

Step-by-Step Solution

Answer

Answer

 

On the CVP graph, the breakeven point is the point where the line of sales revenue and total costs intersects.

 

Step 1:Break-even point

The point where the entity is neither a profit nor not at a loss is known as the breakeven point.

Step 2: Reasoning

The point where the line of sales revenue and total costs intersects is known as the breakeven point because at this level of sales; the operating profit is zero means total sales are equal to the total cost.