Question

A​ firm's ________ is the level of sales necessary to cover all operating​ costs, i.e., the point at which EBIT equals zero. A. operating breakeven point B. cash breakeven point C. total breakeven point D. financial breakeven point

Answer 1

Answer:

A) Operating break even point

Explanation:

Operating break even point:This is the point when a business sales revenue is able to cover both the fixed and variable cost leaving the business with no Profits.

The firm doesn't make profit in operating break even point but doesn't incur loss either.

Fixed cost are cost that doesn't change during production process such as buildings, machineries, furniture and fittings etc.

Variable cost are cost that changes during the production Process such as raw materials which is used up during production.

Answer 2

Answer: A. operating break-even point

Explanation: A firms operating break even point is the point at which the sales for a period is enough to cover all the firms operating costs without any profit.

It can also be said to be the point where a firms sales is equal to its total fixed and variable costs.

Operating break even point can be expressed as Sales = fixed + variable cost.