Question

IF A COMPANY WANTS TO OPERATE ITSELF ON A BREAK EVEN POINT BY CHANGING VARIABLE COST.​

Answer 1

Answer:

Reply with regard to operation of a company at a break even point

Explanation:

Before explaining the reply of the answer, one should understand the reply to following points:-

1. What is a break even point.

Break even point means that company if operating at neither profit nor loss.  Means if the company produces/sales one extra unit there will be a profit and if the company reduces its production/sales by even one unit there will be a loss.

2. what is a variable cost and a fixed cost.

Fixed cost means these are those cost which a company is to bear even if it produces/sales not even a single unit. The examples are

Minimum Salaries to staff not connected with the production

Interest on loan taken from any bank/institution

whereas variable cost means:-

These are the cost which depends upon production of one extra unit means if one additional unit is produced what addition cost company will inur i.e. may be on raw material, wages of production labour et

3. what is the meaning of operation at a break even point

Now working at a break even point means all the company is neither incurring the losses nor profit.

I think above explanation will clear the question