SXF 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

Quizplus · Accepted Answer

Area C represents the estimated profit at the actual volume, which is the difference between total revenue and total costs at the given sales level. Since it is above the breakeven point, it indicates that the company is earning a profit at this level of sales.

SXF Corporation Sells Its Single Product for $14 Per Unit