Line XY in Break-Even Analysis Chart

Steps:

• Identify the break-even point where total revenue equals total costs, resulting in zero profit.
• Locate line XY on the chart, which connects the revenue and cost lines at this intersection.
• Recognize that at break-even, profit is zero, as no excess revenue exists over costs.
• Confirm XY represents the profit level, which is zero at this point.

Why B is correct:

• At the break-even point, profit equals zero by definition, as revenue covers exactly the fixed and variable costs with no surplus.

Why the others are wrong:

• A: Margin of safety measures sales above break-even, not represented by XY at the exact break-even.
• C: Total contribution at break-even covers fixed costs exactly, equaling zero net contribution to profit, not shown as a line.
• D: Insufficient information on option D to evaluate.

Final answer: B