Chapter 3, Problem 23E

Profit Equation Components

Identify each of the following profit equation components on the following graph:

1. a.      The total cost line.
2. b.      The total revenue line.
3. c.       The total variable costs area.
4. d.      Variable cost per unit.
5. e.       The fixed costs area.
6. f.        The break-even point.
7. g.      The profit area (range of volumes leading to profit).
8. h.      The loss area (range of volumes leading to loss).