describe applications of break-even analysis in practice. provide limitations of break-even analysis.

Expert Solution

ekkarill92 answered 1 year ago

Critically evaluate the limitations of Break-Even Analysis

Discuss the limitations of break-even analysis in production and how to overcome these limitations.

What is break-even? How is break-even calculated? How is a break-even analysis used? What are the...

What is break-even? How is break-even calculated? How is a break-even analysis used? What are the risks if break-even is not analyzed carefully?

The objective of break-even analysis is:

The objective of break-even analysis is:A.determine the number of units to produce that will equate total profit with total costB.determine the number of units to produce that will equate total revenue with total costC.determine the number of units to produce that will equate variable cost with fixed costD.determine the number of units to produce to maximize profit

Break-even Analysis : Break-even analysis attempts to determine the volume of sales necessary for a manufacturer...

Break-even Analysis : Break-even analysis attempts to determine the volume of sales necessary for a manufacturer to cover costs, or to make revenue equal costs. It is helpful in setting prices, estimating profit or loss potentials, and determining the discretionary costs that should be incurred. The general formula for calculating break-even units is: Break-even Units = ( Total fixed costs ) / ( Unit selling price - Unit variable cost ) In StratSim, total fixed costs can be broken into...

What is the purpose of break even Analysis?

Consider the concept of break even analysis and target income. In order to apply break even...

Consider the concept of break even analysis and target income. In order to apply break even analysis, why would the expenses reported in external financial reports need to be reorganized into categories based on cost behavior? How do these analytical tools relate to product pricing and cost management (i.e., why would this analysis be useful to management)?

Explain why break even is so important. Describe the elements of break even and write the...

Explain why break even is so important. Describe the elements of break even and write the formula for break even.

what are the drawbacks of sensitivity analysis, scenario analysis and break-even analysis? are they reliable in...

what are the drawbacks of sensitivity analysis, scenario analysis and break-even analysis? are they reliable in open market conditons?

Please provide me a solution step by step. Problem 6-22 CVP Applications; Contribution Margin Ratio; Break-Even...

Please provide me a solution step by step. Problem 6-22 CVP Applications; Contribution Margin Ratio; Break-Even Analysis; Cost Structure [LO6-1, LO6-3, LO6-4, LO6-5, LO6-6] Due to erratic sales of its sole product—a high-capacity battery for laptop computers—PEM, Inc., has been experiencing financial difficulty for some time. The company’s contribution format income statement for the most recent month is given below: Sales (19,500 units × $30 per unit) $ 585,000 Variable expenses 409,500 Contribution margin 175,500 Fixed expenses 180,000 Net...

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