Discuss the various uses for break-even analysis. (LO5-2)

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Answer 1

Textbook Question

Chapter 5, Problem 1DQ

Discuss the various uses for break-even analysis. (LO5-2)

Expert Solution & Answer

Summary Introduction

To explain: The varied usage of break-even analysis.

Introduction:

Break-even analysis (BEP):

This analysis helps a firm to determine no profit and no loss situation. It also helps to determine the relationship between cost, profit and volume.

Answer to Problem 1DQ

The main uses of break-even analysis are as follows:

1. It determines the selling price.

2. It covers return on capital employed.

3. It determines cost and profit.

4. It provides suggestions.

5. It helps in comparing profits among firms.

Explanation of Solution

The major usage of break-even analysis is mentioned below:

1) Determines selling price: It helps in finding out the selling price which will provide the desired amount of profits.

2) Covers return on Capital Employed: It also aids in covering the return on capital employed by fixing the volume of sales.

3) Determines Cost and profit: It helps in finding out the cost and profit in case the volume changes. Not only that, it also aids in determining both revenues and costs and different levels of outputs. Moreover, it helps in disclosing both the businessâ€™ strength and the firm's profit-earning capacity in an easy way.

4) Provides suggestions: In case the sales mix shifts from one place to another this break-even analysis helps in providing suggestions for the same and also helps in comparing the profits of different firms. Not only that BEP helps in providing correct decisions through the activities of forecasting and long term planning activities.

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Answer 2

Textbook Question

Chapter 5, Problem 1DQ

Discuss the various uses for break-even analysis. (LO5-2)

Expert Solution & Answer

Summary Introduction

To explain: The varied usage of break-even analysis.

Introduction:

Break-even analysis (BEP):

This analysis helps a firm to determine no profit and no loss situation. It also helps to determine the relationship between cost, profit and volume.

Answer to Problem 1DQ

The main uses of break-even analysis are as follows:

1. It determines the selling price.

2. It covers return on capital employed.

3. It determines cost and profit.

4. It provides suggestions.

5. It helps in comparing profits among firms.

Explanation of Solution

The major usage of break-even analysis is mentioned below:

1) Determines selling price: It helps in finding out the selling price which will provide the desired amount of profits.

2) Covers return on Capital Employed: It also aids in covering the return on capital employed by fixing the volume of sales.

3) Determines Cost and profit: It helps in finding out the cost and profit in case the volume changes. Not only that, it also aids in determining both revenues and costs and different levels of outputs. Moreover, it helps in disclosing both the businessâ€™ strength and the firm's profit-earning capacity in an easy way.

4) Provides suggestions: In case the sales mix shifts from one place to another this break-even analysis helps in providing suggestions for the same and also helps in comparing the profits of different firms. Not only that BEP helps in providing correct decisions through the activities of forecasting and long term planning activities.

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Answer 3

Textbook Question

Chapter 5, Problem 1DQ

Discuss the various uses for break-even analysis. (LO5-2)

Expert Solution & Answer

Summary Introduction

To explain: The varied usage of break-even analysis.

Introduction:

Break-even analysis (BEP):

This analysis helps a firm to determine no profit and no loss situation. It also helps to determine the relationship between cost, profit and volume.

Answer to Problem 1DQ

The main uses of break-even analysis are as follows:

1. It determines the selling price.

2. It covers return on capital employed.

3. It determines cost and profit.

4. It provides suggestions.

5. It helps in comparing profits among firms.

Explanation of Solution

The major usage of break-even analysis is mentioned below:

1) Determines selling price: It helps in finding out the selling price which will provide the desired amount of profits.

2) Covers return on Capital Employed: It also aids in covering the return on capital employed by fixing the volume of sales.

3) Determines Cost and profit: It helps in finding out the cost and profit in case the volume changes. Not only that, it also aids in determining both revenues and costs and different levels of outputs. Moreover, it helps in disclosing both the businessâ€™ strength and the firm's profit-earning capacity in an easy way.

4) Provides suggestions: In case the sales mix shifts from one place to another this break-even analysis helps in providing suggestions for the same and also helps in comparing the profits of different firms. Not only that BEP helps in providing correct decisions through the activities of forecasting and long term planning activities.

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Answer 4

Textbook Question

Chapter 5, Problem 1DQ

Discuss the various uses for break-even analysis. (LO5-2)

Expert Solution & Answer

Summary Introduction

To explain: The varied usage of break-even analysis.

Introduction:

Break-even analysis (BEP):

This analysis helps a firm to determine no profit and no loss situation. It also helps to determine the relationship between cost, profit and volume.

Answer to Problem 1DQ

The main uses of break-even analysis are as follows:

1. It determines the selling price.

2. It covers return on capital employed.

3. It determines cost and profit.

4. It provides suggestions.

5. It helps in comparing profits among firms.

Explanation of Solution

The major usage of break-even analysis is mentioned below:

1) Determines selling price: It helps in finding out the selling price which will provide the desired amount of profits.

2) Covers return on Capital Employed: It also aids in covering the return on capital employed by fixing the volume of sales.

3) Determines Cost and profit: It helps in finding out the cost and profit in case the volume changes. Not only that, it also aids in determining both revenues and costs and different levels of outputs. Moreover, it helps in disclosing both the businessâ€™ strength and the firm's profit-earning capacity in an easy way.

4) Provides suggestions: In case the sales mix shifts from one place to another this break-even analysis helps in providing suggestions for the same and also helps in comparing the profits of different firms. Not only that BEP helps in providing correct decisions through the activities of forecasting and long term planning activities.

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Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

Summary Introduction

To explain: The varied usage of break-even analysis.

Introduction:

Break-even analysis (BEP):

This analysis helps a firm to determine no profit and no loss situation. It also helps to determine the relationship between cost, profit and volume.

Answer to Problem 1DQ

The main uses of break-even analysis are as follows:

1. It determines the selling price.

2. It covers return on capital employed.

3. It determines cost and profit.

4. It provides suggestions.

5. It helps in comparing profits among firms.

Explanation of Solution

The major usage of break-even analysis is mentioned below:

1) Determines selling price: It helps in finding out the selling price which will provide the desired amount of profits.

2) Covers return on Capital Employed: It also aids in covering the return on capital employed by fixing the volume of sales.

3) Determines Cost and profit: It helps in finding out the cost and profit in case the volume changes. Not only that, it also aids in determining both revenues and costs and different levels of outputs. Moreover, it helps in disclosing both the businessâ€™ strength and the firm's profit-earning capacity in an easy way.

4) Provides suggestions: In case the sales mix shifts from one place to another this break-even analysis helps in providing suggestions for the same and also helps in comparing the profits of different firms. Not only that BEP helps in providing correct decisions through the activities of forecasting and long term planning activities.

Answer 8

Expert Solution & Answer

Summary Introduction

To explain: The varied usage of break-even analysis.

Introduction:

Break-even analysis (BEP):

This analysis helps a firm to determine no profit and no loss situation. It also helps to determine the relationship between cost, profit and volume.

Answer to Problem 1DQ

The main uses of break-even analysis are as follows:

1. It determines the selling price.

2. It covers return on capital employed.

3. It determines cost and profit.

4. It provides suggestions.

5. It helps in comparing profits among firms.

Explanation of Solution

The major usage of break-even analysis is mentioned below:

1) Determines selling price: It helps in finding out the selling price which will provide the desired amount of profits.

2) Covers return on Capital Employed: It also aids in covering the return on capital employed by fixing the volume of sales.

3) Determines Cost and profit: It helps in finding out the cost and profit in case the volume changes. Not only that, it also aids in determining both revenues and costs and different levels of outputs. Moreover, it helps in disclosing both the businessâ€™ strength and the firm's profit-earning capacity in an easy way.

4) Provides suggestions: In case the sales mix shifts from one place to another this break-even analysis helps in providing suggestions for the same and also helps in comparing the profits of different firms. Not only that BEP helps in providing correct decisions through the activities of forecasting and long term planning activities.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Summary Introduction

To explain: The varied usage of break-even analysis.

Introduction:

Break-even analysis (BEP):

This analysis helps a firm to determine no profit and no loss situation. It also helps to determine the relationship between cost, profit and volume.

Answer 12

Answer to Problem 1DQ

The main uses of break-even analysis are as follows:

1. It determines the selling price.

2. It covers return on capital employed.

3. It determines cost and profit.

4. It provides suggestions.

5. It helps in comparing profits among firms.

Answer 13

Explanation of Solution

The major usage of break-even analysis is mentioned below:

1) Determines selling price: It helps in finding out the selling price which will provide the desired amount of profits.

2) Covers return on Capital Employed: It also aids in covering the return on capital employed by fixing the volume of sales.

3) Determines Cost and profit: It helps in finding out the cost and profit in case the volume changes. Not only that, it also aids in determining both revenues and costs and different levels of outputs. Moreover, it helps in disclosing both the businessâ€™ strength and the firm's profit-earning capacity in an easy way.

4) Provides suggestions: In case the sales mix shifts from one place to another this break-even analysis helps in providing suggestions for the same and also helps in comparing the profits of different firms. Not only that BEP helps in providing correct decisions through the activities of forecasting and long term planning activities.

Answer 14

Ch. 5 - Discuss the various uses for break-even analysis....Ch. 5 - What factors would cause a difference in the use...Ch. 5 - Explain how the break-even point and operating...Ch. 5 - Prob. 4DQ Ch. 5 - What does risk taking have to do with the use of...Ch. 5 - Discuss the limitations of financial leverage....Ch. 5 - Prob. 7DQ Ch. 5 - Explain how combined leverage brings together...Ch. 5 - Explain why operating leverage decreases as a...Ch. 5 - Prob. 10DQ

Discuss the various uses for break-even analysis. (LO5-2)

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