Question

Discuss breakeven analysis. What is its intent? How is it calculated?

Answer 1

breakeven analysis tells us about the condition whether a company produce more output or just stop producing. the breakeven point is important because it explains  the relationship between costs, production volume and revenue. it shows the minimall amount of economic activity that is a must to prevent potential losses. the breakeven point shows at what point an investment will start generating a possitive return.

to know the breakeven point the essential datas one has to have is on fixed cost, variable cost and the selling price.

the formula to calculate the breakeven point is fixed cost/ (selling price-variable cost)