Final answer:
The statement that a cost-volume profit graph depicts the relationships among cost, volume, and profits, by plotting the total revenue line and the total cost line on the graph is true. (option a)
Step-by-step explanation:
The statement is true; a cost-volume-profit graph does depict the relationships among cost, volume, and profits, with the total cost curve starting at the level of fixed costs and the total revenue line illustrating the increase in revenue with more units sold.
The statement that a cost-volume profit graph depicts the relationships among cost, volume, and profits is true. Such a graph plots both the total revenue line and the total cost line to illustrate how these elements interact. On the graph, the horizontal axis typically represents the quantity of goods produced or sold, while the vertical axis shows costs and revenue in monetary terms.
The total cost curve begins at the point on the vertical axis that reflects fixed costs – expenses that do not change with production volume – because even at zero production, these costs are incurred. Beyond this point, as production increases, the total cost curve slopes upwards, representing additional variable costs. The total revenue line typically starts at the origin (if there are no sales, there's no revenue) and slopes upward, reflecting an increase in revenue as more units are sold.
Where these two lines intersect indicates the break-even point, where total revenue equals total costs and the company makes no profit. Beyond this intersection, the area between the total revenue line and the total cost curve represents profits, as total revenue exceeds total costs.