Asked by Canon Graef on May 05, 2024
Verified
Plots only the difference between total sales and total costs
A) Profit-volume chart
B) Cost-volume-profit chart
C) Sales mix
D) Operating leverage
E) Margin of safety
Profit-Volume Chart
A graphical representation that shows the relationship between a company's profits and its level of output or sales volume.
Total Sales
The sum of all revenues earned from selling goods or services within a specific period.
Total Costs
The sum of all expenses incurred in the production of goods or services, including both fixed and variable costs.
- Comprehend and compute the contribution margin, as well as its significance in evaluating a firm's profit levels.
Verified Answer
GP
Gavin PeartMay 11, 2024
Final Answer :
A
Explanation :
B) Cost-volume-profit chart - shows the relationship between cost, volume, and profits, allowing businesses to determine their break-even point and analyze their profitability at different levels of operation.
C) Sales mix - the proportion of each product a company sells relative to its total sales, which can impact the company's profitability and break-even point.
D) Operating leverage - a measure of how much a company's costs consist of fixed costs versus variable costs, which affects profitability and the break-even point.
E) Margin of safety - the amount of sales a company can lose before it reaches its break-even point, which can help businesses assess their risk and plan for unexpected changes in sales.
Answer:
A) Profit-volume chart
This term specifically refers to plotting only the difference between total sales and total costs.
C) Sales mix - the proportion of each product a company sells relative to its total sales, which can impact the company's profitability and break-even point.
D) Operating leverage - a measure of how much a company's costs consist of fixed costs versus variable costs, which affects profitability and the break-even point.
E) Margin of safety - the amount of sales a company can lose before it reaches its break-even point, which can help businesses assess their risk and plan for unexpected changes in sales.
Answer:
A) Profit-volume chart
This term specifically refers to plotting only the difference between total sales and total costs.
Learning Objectives
- Comprehend and compute the contribution margin, as well as its significance in evaluating a firm's profit levels.