Let's break down the problem step by step.

Given:

• Cost: $19.84
• Breakeven Point: $27.84
• Reduced Price: $17.46

Definitions:

• Operating Expense: The total cost incurred to maintain the business.
• Operating Loss: Occurs when the reduced price is less than the breakeven point.
• Absolute Loss: Occurs when the reduced price is less than the cost price.

Steps:

1. Find Operating Expense:
   The breakeven point is calculated as: $\text{Breakeven Point} = \text{Cost} + \text{Operating Expense}$ Substituting the given values: $27.84 = 19.84 + \text{Operating Expense}$ $\text{Operating Expense} = 27.84 - 19.84 = 8$

2. Find Operating Loss:
   Operating loss occurs if the reduced price is less than the breakeven point: $\text{Operating Loss} = \text{Breakeven Point} - \text{Reduced Price}$ Substituting the given values: $\text{Operating Loss} = 27.84 - 17.46 = 10.38$

3. Find Absolute Loss:
   Absolute loss occurs if the reduced price is less than the cost: $\text{Absolute Loss} = \text{Cost} - \text{Reduced Price}$ Substituting the given values: $\text{Absolute Loss} = 19.84 - 17.46 = 2.38$

Answer:

The correct answer is B:

• Operating Expense = $8
• Operating Loss = $10.38
• Absolute Loss = $2.38

Would you like further details or have any questions?

Here are 5 related questions:

1. How would operating profit be calculated if the reduced price were higher than the breakeven point?
2. What is the significance of a breakeven point in business?
3. How does absolute loss differ from operating loss in financial terms?
4. Can operating expenses vary, and what factors could affect them?
5. How could a business mitigate absolute and operating losses?

Tip: Always ensure to distinguish between cost, breakeven point, and reduced price to calculate losses or profits effectively.