The Following Diagram Is a Cost-Volume-Profit Graph for a Manufacturing

question 2

Multiple Choice

The following diagram is a cost-volume-profit graph for a manufacturing company: Select the answer that best describes the labeled item on the diagram.

• A)Area CDE represents the area of net loss.
• B)Line AC graphs total fixed costs.
• C)Point D represents the point at which the contribution margin per unit increases.
• D)Line AC graphs total costs.

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Definitions:

Accounts

Financial records of an organization that represent transactions and their effects on its assets, liabilities, and equity.

Chart of Accounts

A structured list of all the accounts in a company’s general ledger, which records all financial transactions.

Journal Entry

A record in the books of accounts that represents a transaction and its effect on various accounts.

Posting References

Identifiers used in accounting to link journal entries to the corresponding ledger accounts for audit trails and record-keeping accuracy.