COST ACCOUNTING
BREAK EVEN POINT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which of the following are benefits of using break-even analysis?
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The margin of safety is known
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The owner can make adjustments as it is a plan
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Prices could change
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The owner knows how many goods to sell to make a profit
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Explanation:
Detailed explanation-1: -The break-even analysis helps the company to decide the least number of sales required to make profits. With the margin of safety reports, the management can execute a high business decision. Monitors and controls cost: Companies’ profit margin can be affected by the fixed and variable cost.
Detailed explanation-2: -A breakeven analysis is a calculation that tells small business owners what quantity of product must be sold to be profitable. It helps entrepreneurs come up with a pricing strategy that will not only cover costs but will generate a gross profit.
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