Echo Ltd Sells Its Single Product for $14 Per Unit

question 48

Multiple Choice

Echo Ltd 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 B is best described as:

• A) fixed cost.
• B) margin of safety.
• C) estimated profit at actual volume.
• D) breakeven point.

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of goods sold in a company, including materials and labor.

Selling and Administrative Expenses

The total of all overhead and operational expenses directly tied to the selling and general management of an organization.

Budgeted Purchases

This refers to the estimated amount of goods or services that a business plans to buy over a specific period, as set out in its budget.

Direct Materials Budget

A financial plan that estimates the raw materials necessary for production, considering planned inventory levels and production requirements.