Which of the following statements regarding break-even analysis is accurate?
A) Break-even analysis will help a company to determine profit at various levels of sales and costs.
B) Break-even analysis will help determine the sales volume point after which a company will begin to earn a profit.
C) Break-even analysis is often used in identifying areas where costs can be reduced or eliminated to help increase profit.
D) Once break-even in units is determined, the break-even dollars can be calculated by multiplying the break-even in units by the variable costs per unit.

Question

Quizplus · Accepted Answer

Determining the break-even point is important because it identifies how much product must be sold before a company will begin earning profit. This information can be used along with other data, such as estimated sales volume, to help the company make decisions on product pricing and cost structure to promote profitability.

Which of the Following Statements Regarding Break-Even Analysis Is Accurate