If sales volume exceeds the break-even point, the firm sill experience a)an operating loss,b)an operating profit c)an increase in plant and equipment d)an increase in stock price
If you exceed your break even point, it sounds like you would be making a profit.
If sales volume exceeds the break-even point, the firm will experience an operating profit (option b).
To understand why, let's first explain what the break-even point is. The break-even point is the level of sales at which the company's total revenue equals its total costs, resulting in neither a profit nor a loss.
When sales volume surpasses the break-even point, it means that the total revenue generated by the firm is greater than its total costs, including both fixed costs (e.g., rent, salaries) and variable costs (e.g., raw materials, direct labor). This excess revenue over costs is known as the operating profit.
To determine whether a firm will experience an operating loss or an operating profit, you will need to compare the actual sales volume with the break-even point. If the sales volume exceeds the break-even point, the firm will generate more revenue than the costs it incurs, resulting in an operating profit.
On the other hand, if the sales volume falls below the break-even point, the firm will not generate enough revenue to cover its costs, resulting in an operating loss (option a). In this case, the firm would be selling at a loss and not making a profit.
As for options c and d, they are not directly related to sales volume exceeding the break-even point. An increase in plant and equipment (option c) usually occurs due to capital investments or expansion plans, which may or may not be influenced by sales volume. An increase in stock price (option d) is tied to various factors such as market conditions, financial performance, and investor sentiment, rather than just the sales volume exceeding the break-even point.