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: Point A is best described as:

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

Question

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: Point A is best described as:

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

Quizplus · Accepted Answer

Point A on the CVP graph represents the breakeven point, where the total sales revenue equals total costs (fixed and variable). At this point, the company is not making a profit, but it is not incurring any losses either.

SXF Corporation Sells Its Single Product for $14 Per Unit