Break-even analysis is used in situations when:
A)the decision-maker is a non-profit organisation.
B)the decision-maker is concerned with questions such as 'What will be the net present value if sales are 20% lower than expected?'
C)the project under consideration is an item that does not generate positive cash flows.
D)the decision-maker is concerned with questions such as 'How low can sales go before the project starts losing money?'

Question

Quizplus · Accepted Answer

Break-even analysis is used to determine the level of sales needed to cover all costs associated with a project or investment. It helps decision-makers understand the minimum level of sales required to avoid losing money on the project. Therefore, option D is the best choice as it summarizes this purpose.

Break-Even Analysis Is Used in Situations When