In the Graph Method of CVP Analysis, the Horizontal Line

question 174

True/False

In the graph method of CVP analysis, the horizontal line above the x-axis represents the total cost line.

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Definitions:

Absorption Costing

A costing method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overhead - in the cost of a product.

Operating Income

The profit realized from a business's core operating activities, excluding costs and revenues from non-operating activities.

Variable Costing

An accounting methodology that only includes variable production costs (costs that change with the level of output) in product costs.

Absorption Costing

An accounting method that includes all of the costs associated with manufacturing a product in the cost of that product.