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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

QualificationExamRelationshipPeriod
ACCA PM Direct September 2026–June 2027