One function of breakeven analysis is to ________.
A) determine the profit attributable to each stockholder
B) evaluate the effect of leverage on a firm's risks and returns
C) evaluate the profitability of various sales levels
D) determine the amount of financing needed by the firm

Question

Quizplus · Accepted Answer

Breakeven analysis helps a company to evaluate the profitability of various sales levels by calculating the level of sales required to cover all costs, including fixed and variable costs. By analyzing the breakeven point, a firm can determine the level of sales needed to generate a profit and can also use the analysis to evaluate the profitability of different pricing strategies, cost structures, and production levels.

One Function of Breakeven Analysis Is to ________