Which lines are plotted on a breakeven chart?

Which lines are plotted on a breakeven chart?

• A. Sales revenue line, Fixed costs line, Total costs line
• B. Profit line, Variable costs line, Fixed costs line
• C. Contribution line, Variable costs line, Fixed costs line
• D. Sales revenue line, Contribution line, Total costs line

Answer: (A)

Breakeven charts show how revenue compares with costs as output changes, highlighting the point where income just covers all costs. For this, you plot the sales revenue line, which increases with quantity, a fixed costs line that stays horizontal since fixed costs don’t vary with output, and the total costs line, which starts at the fixed cost level and rises with output due to variable costs. The breakeven point is where the sales revenue line equals the total costs line, indicating zero profit. This standard setup directly demonstrates whether revenue is enough to cover all costs and how profit turns positive beyond that point. While some charts may include a contribution line in other analyses, the conventional breakeven chart uses the revenue line, fixed costs line, and total costs line.

Breakeven charts show how revenue compares with costs as output changes, highlighting the point where income just covers all costs. For this, you plot the sales revenue line, which increases with quantity, a fixed costs line that stays horizontal since fixed costs don’t vary with output, and the total costs line, which starts at the fixed cost level and rises with output due to variable costs. The breakeven point is where the sales revenue line equals the total costs line, indicating zero profit.

This standard setup directly demonstrates whether revenue is enough to cover all costs and how profit turns positive beyond that point. While some charts may include a contribution line in other analyses, the conventional breakeven chart uses the revenue line, fixed costs line, and total costs line.