Question

Discuss several courses of action company management might take to decrease the break-even point and increase profits. Identify specific examples of action companies might take to decrease the break even point. (At least 75 words.)

Answer 1

Decreasing break even point depends upon 2 possible actions to be taken.

1. Increasing Contribution margin

2. Decreasing Fixed Cost

For Increasing Contribution margin,

We have to do either increase the selling price or reduce the variable costs are possible ways.

By increasing selling price Total sale units may or may not drop depend upon demand of the product.

If demand is high, Increasing the price is good choice but at the same time think about competitors price too.

For decreasing variable costs, we have to search for alternative producer of the raw material.

preferably new business starters will reduce the price until they stand in market.

Reducing fixed costs depends on reducing the no. of supervisors by allocating more works to exist supervisors like.

and reducing the rental values of premises, etc.,

By Decreasing fixed costs, reducing variable costs, increasing sale price or all together, we can reduce break even point as well as increase the profits of the organization.