Question
1. Observe the following diagram explaining break-even analysis and answer the questions. Cests/Revenues (S) 12,000 10,000 8,000 Total Operating Cad 6,000 Loss Operating Brookevon
1. Observe the following diagram explaining break-even analysis and answer the questions. Cests/Revenues (S) 12,000 10,000 8,000 Total Operating Cad 6,000 Loss Operating Brookevon Point 4,000 2,000 Foxad Operating Cost 1,000 1,500 2,000 2,500 3,000 Sales (units) (a)At operating breakeven point explain why operating profit (EBIT) is zero? (b) Explain why fixed operating cost is a horizontal straight line? (c) Suppose the firmsellsmore than operating break even quantity (500 units), the operating profit will be positive or negative? Why? (d) Explain whytotal operating cost curve starts from the point $3000in Y axis?
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