)iscussion Questions [4 points each] 1. 2. 3. Dene the terms xed cost and variable cost. Explain how an understanding of the distinction between fixed cost and variable cost can be useful to managers. What is meant by the breakeven point for an activity? How is the REF calculated? Why is it useful to know the REF? When we say that some business activity has high operating gearing, what do we mean? What are the implications for the business of high operating gearing? . If there is a scarce resource that is restricting sales, how will the business maximize its profit? Explain the logic of the approach that you have identied for maximizing profit. . Costs may be classied in a variety of ways according to their nature and the information needs of management.' Explain and discuss this statement, illustrating with examples of the classifications required for different purposes