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What Are The Various Uses For Break-even Analysis? |
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Answer» Such analysis allows the firm to determine at what level of operations it will break even (earn zero profit) and to explore the relationship between volume, costs, and PROFITS. It helps the management that at current costs of products how MANY numbers of units must be sold to recover the cost of producing the product. For Example: If you spend, $200 on producing a product and selling price is $20 then you must SALE 10 units to recover the cost of product. Such analysis allows the firm to determine at what level of operations it will break even (earn zero profit) and to explore the relationship between volume, costs, and profits. It helps the management that at current costs of products how many numbers of units must be sold to recover the cost of producing the product. For Example: If you spend, $200 on producing a product and selling price is $20 then you must sale 10 units to recover the cost of product. |
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