Break-even chart interpretation: where is publicity (advertising) expenditure represented? A company spends a substantial, largely time-based amount on sales publicity. In a standard break-even chart, this expenditure is depicted as belonging under which cost line/category?

Introduction / Context:
Break-even charts separate costs into fixed and variable components to show how total cost and revenue vary with output. Understanding which expenses are fixed versus variable is essential for accurate analysis and decisions.

Given Data / Assumptions:

• Publicity/advertising is planned and budgeted per period (e.g., per month), not per unit.
• Short-run production volume does not appreciably change the advertising spend.
• We assume classical linear cost behavior within a relevant range.

Concept / Approach:
Fixed costs do not vary with output in the short run. Advertising outlays, being time-based and not unit-driven, are categorized as fixed (or largely fixed). On a break-even chart, fixed cost is a horizontal line starting from a positive intercept at zero output; publicity cost is included in that baseline.

Step-by-Step Solution:
Identify cost behavior: advertising does not change with each extra unit produced.Classify as fixed cost.Place it under the fixed cost line on the chart; total fixed cost is the sum of such period expenses.

Verification / Alternative check:
Managerial accounting texts treat period marketing and administrative expenses as fixed within the relevant range, which aligns with break-even charting conventions.

Why Other Options Are Wrong:
(B) Variable costs change with units; (C) total cost includes variable + fixed but the categorization sought is fixed; (D) revenue is unrelated; (E) contribution is revenue minus variable cost, not a cost line.

Common Pitfalls:
Confusing step-fixed, mixed, or discretionary fixed costs; misclassifying short-term campaigns that may vary by season as variable per unit.

Final Answer:
fixed cost line