30-05-2012, 01:57 PM
Uses BREAK EVEN ANALYSIS
BREAK EVEN ANALYSIS.pptx (Size: 65.09 KB / Downloads: 29)
USES OF BREAK EVEN ANALYSIS:
Sales volume can be determined to earn a given amount of return on capital
Profit can be forecast if estimates of revenue and cost are available
Effect of change in volume of sale price, cost of production, can be appraised
Choice of products can be made from alternatives available. Product mix can also be determined
Impact of increase or decrease in fixed and variable costs can be high lightened
Effect of high fixed costs and low variable costs to the total cost can be studied
Valid inter-firm comparisons of profitability can be made
Cash break-even chart helps proper planning of cash requirements
Break-even analysis emphasises the importance of capacity utilization for achieving economics
Further help is provided by margin of safety and angle of incidence