Businesses

are able to
conduct 'what
if' analysis -
Shows the
seeing what
minimum
will happen if
sales needed
prices
to avoid
change, The point at
losses and Fixed costs/
variable costs which total
shows the price -
change or costs = total
margin of variable costs
fixed costs revenue
safety
change
Break even
Helps analysis and
businesses charts are a
Definition
make pricing prediction and
decisions so are only as
Formula
accurate as
Uses of Break the data they
The business Even Analysis Break Even are based
on.
can predict
profit - if the Point Drawbacks of
price is fairly
fixed, the firm Break Even
can estimate Break even Analysis Break even
sales and charts are a Variable costs analysis is
work out profit useful way for per unit may difficult in a
accountants change as a multi-product
The business to present result of a business.
can seek financial discount, for
finance by information to example For a new
illustrating management buying product
Break even materials in businesses
how profitable
analysis gives bulk This assumes
the firm will may be
the business production
be. uncertain

a starting about the and sales are

point to price they will the same and
indicate if Break even charge, nor does not
continuing is calculations they will know account for
worthwhile assumes that the variable the surplus of
prices are costs or fixed stock a
constant until they business may
begin have
production.