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Which of the following statements is correct with regard to a Cost-Volume-Profit graph?
A Cost-Volume-Profit graph shows the maximum possible profit.
A Cost-Volume-Profit graph shows the break-even point as the intersection of the total sales
revenue line and the total expense line.
A Cost-Volume-Profit graph assumes that total expense varies in direct proportion to unit sales.
A Cost-Volume-Profit graph shows the operating leverage as the gap between total sales revenue
and total expense at the actual level of sales.

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  • 1. Which of the following statements is correct with regard to a Cost-Volume-Profit graph? A Cost-Volume-Profit graph shows the maximum possible profit. A Cost-Volume-Profit graph shows the break-even point as the intersection of the total sales revenue line and the total expense line. A Cost-Volume-Profit graph assumes that total expense varies in direct proportion to unit sales. A Cost-Volume-Profit graph shows the operating leverage as the gap between total sales revenue and total expense at the actual level of sales.