Break‑even analysis may be used to show
A) the relationship between debt financing and earnings
B) the level of sales necessary to avoid losses
C) the level of output required to maximize profits
D) the relationship between sales and equity

Question

Break‑even analysis may be used to show​
A) ​the relationship between debt financing and earnings
B) ​the level of sales necessary to avoid losses
C) ​the level of output required to maximize profits
D) the relationship between sales and equity​

Quizplus · Accepted Answer

Break-even analysis is used to determine the level of sales that a company needs to generate to avoid losses. It calculates the point at which total revenue equals total costs, indicating that the company is neither earning a profit nor incurring a loss.

Break‑even Analysis May Be Used to Show​

Break‑even Analysis May Be Used to Show