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Q20-19RQ

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Horngren'S Financial And Managerial Accounting
Found in: Page 1119

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Short Answer

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

Answer

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

See the step by step solution

Step by Step Solution

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.

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