ICAEW BIP · Chapter 11 · Question 6 of 10
On a profit-volume (P/V) chart for a single product, what does the slope (gradient) of the profit line represent?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Contribution per unit
Explanation
A P/V chart plots profit against sales volume. The line starts at a loss equal to fixed costs at zero sales, and profit rises by the contribution earned on each extra unit, so the gradient is contribution per unit. If sales are measured in £ revenue, the gradient is the C/S ratio. The line crosses the horizontal axis at the breakeven point.
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