FCS Corporation sells its single product for $14 per unit, and its variable cost per unit is $4. Total fixed costs are $800. Its CVP graph is as follows:

Area C is best described as:

A) Fixed cost
B) Margin of safety
C) Estimated profit at actual volume
D) Breakeven point

Question

FCS Corporation sells its single product for $14 per unit, and its variable cost per unit is $4. Total fixed costs are $800. Its CVP graph is as follows:

Area C is best described as:

A) Fixed cost 
B) Margin of safety 
C) Estimated profit at actual volume 
D) Breakeven point

Quizplus · Accepted Answer

Area C represents the estimated profit at actual volume. It is the difference between total revenue and total costs at the actual level of sales, which is above the breakeven point.

FCS Corporation Sells Its Single Product for $14 Per Unit