Evaluating Break-Even Chart Misstatements

Steps:

• Recall standard break-even chart: fixed costs as horizontal line, total costs as upward line (fixed + variable), revenue as line from origin.
• Assess statement 1: fixed costs form straight horizontal line, confirming correctness.
• Assess statement 2: charts use simple graphs, allowing quick preparation without accounting expertise, confirming correctness.
• Assess statement 3: charts show total costs (combining fixed and variable), not separate variable line, identifying incorrectness.

Why D is correct:

• In break-even analysis, total cost line incorporates variable costs with fixed, per standard graphical method, so statement 3 wrongly implies separation.

Why the others are wrong:

• A: Ignores that only 3 is incorrect, as 1 and 2 hold true.
• B: Falsely includes 1 and 2 as incorrect, but both accurately describe chart features.
• C: Falsely includes 2 as incorrect, overlooking charts' simplicity for non-experts.

Final answer: D