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2-11. A big manufacturing concern runs a number of machine tools, each with a maximum production capacity of 150 items per day. The management of the company claims that the economic breakeven point with these machines is 70 items per day. (2.2) a. Draw a conceptual graph to show the total revenue and total costs that this company is experiencing. b. Identify all types of fixed costs that the manufac turing concern should carefully examine to lower its breakeven point. Explain your reasoning. c. Identify various variable costs that could possibly be reduced to lower the breakeven point. Why did you select these cost items?

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Fixed cost includes – rent, insurance premiums, or loan payments.
Variable cost includes- raw materials, packaging, and labor directly involved in a company’s manufacturing process.
If the Variable cost rises, the BEP (break-even point) may go down to a lower value.
 
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