Profit-volume chart
A profit-volume chart plots profit or loss directly against sales activity. Under a linear single-product model, it starts at a loss equal to fixed costs when sales are zero and crosses the zero-profit axis at break-even. Its slope reflects contribution per unit or the contribution-to-sales ratio, depending on the horizontal axis. Multi-product charts require an explicit mix or sales-order convention.
Worked example
Fixed cost is $10,000 and contribution $5 per unit. The line starts at −$10,000, crosses zero at 2,000 units and shows $5,000 profit at 3,000 units.
Common mistake
The slope is not necessarily a final net-profit percentage; it reflects the contribution relationship in the chosen axes.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | PM | Direct | September 2026–June 2027 |
