Break-even analysis enables businesses to measure profits and losses at different production levels, predict the effects of price and cost changes, and analyze the relationship between fixed and variable costs. However, break-even analysis assumes constant prices, production equals sales, can be time-consuming, and only applies to single products.
Break-even analysis enables businesses to measure profits and losses at different production levels, predict the effects of price and cost changes, and analyze the relationship between fixed and variable costs. However, break-even analysis assumes constant prices, production equals sales, can be time-consuming, and only applies to single products.
Break-even analysis enables businesses to measure profits and losses at different production levels, predict the effects of price and cost changes, and analyze the relationship between fixed and variable costs. However, break-even analysis assumes constant prices, production equals sales, can be time-consuming, and only applies to single products.
Break-even analysis enables a business organization to:
1. Measure profit and losses at different levels of production and sales.
2. Predict the effect of changes in sales prices. 3. Analyze the relationship between fixed and variable costs. 4. Predict the effect of cost and efficiency changes on profitability.
Disadvantages Even with its advantages and uses, there are also several demerits of break-even analysis.
1. Assumes that sales prices are constant at all levels of output.
2. Assumes production and sales are the same. 3. Break even charts may be time consuming to prepare. 4. It can only apply to a single product or single mix of products. 5.