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8 Cards in this Set
- Front
- Back
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advantages of break even analysis |
calculate the break even points in terms of units or sales revenue estimate profit or loss that will result in any given level of output or sales |
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disadvantages of break even analysis |
break even analysis assumes there is only one product. most business produce more than one product the selling price remains the same for long periods of time |
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Is producing a certain product going to be profitable |
If no profit is being produced, then it is better for the business to invest time and money into creating a more profitable product |
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Fixed costs |
A fixed cost is a cost that the business has to pay. They do not change |
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Variable costs |
These costs can change, depending on the produce sold |
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Total costs |
These are the variable and fixed costs added together |
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Intercepting break even charts |
The break even point is calculated so that the firm can forecast the level of profit or the level of loss at a given number of items being produced. |
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How many units have to be sold to make a profit? |
A business can only sell a certain product if it can do it on a large scale. Making a small amount can prove costly |
