When a company sells more units than the break-even point,
A)it moves above the relevant range.
B)profits are positive.
C)there are no new variable costs incurred.
D)profits are negative.

Question

Quizplus · Accepted Answer

Selling more units than the breakeven point means that the company is generating a revenue that is higher than the total costs (fixed and variable). As such, profits will be positive. Option A is incorrect because the relevant range refers to the range of activity within which the assumptions made about cost behavior are valid, it does not change based on actual activity. Option C is incorrect because there may still be variable costs incurred even after the breakeven point is reached. Option D is incorrect because selling more units than the breakeven point will result in positive profits, not negative profits.

When a Company Sells More Units Than the Break-Even Point