 Graphing the cost-volume profit relationship is a five-step process. In step one, we need to choose a sales volume and plot that on our graph. The line will start at the origin because price times zero quantity sold is zero. So graphically, it looks like this. Step two is draw the fixed costs. Remember, this is just a straight horizontal line. It looks something like this. The third step is to draw the total cost line. The total cost is variable costs plus fixed costs. It looks like this. Notice that it doesn't start at the origin but rather at the fixed costs. This is because fixed costs are incurred even if we had zero sales volume. The fourth step is to identify the breakeven point. This is where the total revenue and the total cost lines intersect. And you can see that graphically here. The final step is to identify and mark the areas on the graph that show the operating income or operating loss. You can see that volume levels below the breakeven point result in operating loss and volume levels above the breakeven point result in operating income.