On a CVP Graph, There Is a Point Where the Two

question 75

Multiple Choice

On a CVP graph, there is a point where the two diagonal lines intersect. Which of the following statements accurately describes that point?

• A)It is the point where total revenues equal total variable costs.
• B)It is the point where fixed costs equal variable costs.
• C)It is the point where total revenues equal fixed costs.
• D)It is the point where total costs equal total revenues.

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Definitions:

Target Profit

The desired net income a company aims to achieve within a specific period.

Contribution Margin Ratio

The contribution margin ratio is the percentage of each sales dollar remaining after deducting variable expenses, indicating how much of each dollar contributes to fixed expenses and profit.

Operating Leverage

An indicator of the way in which growth in revenue results in an increase in operating profit, revealing the ratio of fixed to variable expenses within a business.

Net Operating Income

The total profit of a company after operating expenses are deducted, but before taxes and interest payments.