One function of break-even analysis is to
A) evaluate the profitability of various sales levels.
B) create profits.
C) describe leverage.
D) determine the amount of financing needed by the firm.

Question

Quizplus · Accepted Answer

Break-even analysis helps in determining the level of sales at which the company neither makes a profit nor suffers a loss. This helps in evaluating the profitability of various sales levels and determining the minimum number of units to be sold for covering all the costs. It does not necessarily create profits or describe leverage, nor does it determine financing needed by the firm.

One Function of Break-Even Analysis Is to