Fig.3. 4.2.3.5 Profit Volume Graph This graph (called profit graph) gives a pictorial representation of cost-volume profit relationship. In this graph x axis represents sales. However, the sales line bisects the graph horizontally to form two areas. The ordinate above the zero sales line, shows the profit area, and the ordinate below the zero sales line indicates the loss or the fixed cost area. The profit-volume-ratio line is drawn from the fixed cost point through the break-even point to the point of maximum profit. In order to construct this graph, therefore, data on profit at a given level of activity, the break- even point and the fixed costs are required. Illustration 11: Draw the profit volume graph and find out p/v ratio with the following information: Output 3,000 units Volume of sales rs.7,500 Variable cost rs.1,500 Fixed cost rs.1,500