Final answer:
In a Cost-Volume-Profit (CVP) graph, a loss region is defined when the total cost line is above the total sales line, indicating that the number of units sold is less than the break-even point resulting in a loss.
Step-by-step explanation:
On a Cost-Volume-Profit (CVP) graph, a loss region is defined when the total cost line is above the total sales line. This occurs when the number of units sold is less than the break-even point. The break-even point is the number of units that a company needs to sell to cover all its costs (both fixed and variable).
When sales are lower than the costs, the difference represents a loss. Therefore, the area on the graph where the sales line is below the cost line indicates a region of loss. Conversely, when more units are sold than the break-even quantity, the company operates in the profit region because revenues exceed total costs.