Refer to the figure above. Assume that the company whose cost structure is depic
ID: 2410137 • Letter: R
Question
Refer to the figure above. Assume that the company whose cost structure is depicted in the figure expects to produce a loss for the upcoming period. The loss would be shown on the graph:
by the area immediately above the break-even point (letter "H").
by the area immediately below the total cost line. (letter "E")
by the area diagonally to the right of the break-even point (letter "G").
by the area diagonally to the left of the break-even point (letter "F").
Any of the other areas or lines.
by the area immediately above the break-even point (letter "H").
by the area immediately below the total cost line. (letter "E")
by the area diagonally to the right of the break-even point (letter "G").
by the area diagonally to the left of the break-even point (letter "F").
Any of the other areas or lines.
Cos-Volume-Profit Graph $100,000 ? 80,000 60,000 40,000 20,000 1,000 2,000 3,000 4,000 5,000 UhitsExplanation / Answer
Answer is By the area diagonally to the left of the break even point (Letter F)
Explanation:
B is a Total cost line and A is revenue line. The lines meet at break even. The sales below break even is a loss area and hence the area represented by F as the total cost line is above Total revenue line is a loss area.