SXF Corporation Sells Its Single Product for $14 Per Unit

question 42

Multiple Choice

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 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:

Average Cost

An inventory costing method where the cost of goods sold and ending inventory is determined by taking the weighted average of all units purchased.

Periodic Inventory

A method of inventory accounting where updates to inventory levels are made periodically, often at the end of the fiscal year.

Ending Inventory

The total value of goods available for sale at the end of an accounting period, calculated by adding purchases to beginning inventory and subtracting cost of goods sold.

LIFO

An inventory valuation method standing for Last In, First Out, where the most recently produced or acquired items are the first to be sold.