The purpose of financial breakeven analysis is to determine the level of sales a firm needs in order to cover the fixed and variable costs associated with producing and selling inventory items.

Question

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Financial breakeven analysis specifically determines the level of sales needed to cover all fixed costs, resulting in a net income of zero. It does not typically account for variable costs in the calculation, which are instead considered in the calculation of the contribution margin.

The Purpose of Financial Breakeven Analysis Is to Determine the Level