ACCA PM · Chapter 5 · Question 8 of 10
On a traditional breakeven chart, which of the following is true?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) The fixed cost line is drawn parallel to the horizontal (activity) axis
Explanation
Fixed costs do not change with activity, so they are shown as a horizontal line. The total cost line starts at the fixed cost level on the vertical axis, the revenue line starts at the origin, and profit is the vertical gap between total revenue and total cost to the right of the breakeven point.
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