One function of breakeven analysis is to
A) create profits.
B) describe leverage.
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 in evaluating the level of sales at which the company neither makes a profit nor incurs a loss. By analyzing the breakeven point, a company can determine the sales volume required to cover all its expenses and make a profit. This analysis helps in making decisions such as pricing strategy, determining the minimum amount of sales required to stay in business, and evaluating the profitability of different sales levels. Breakeven analysis does not determine profits or financing needs, nor does it describe leverage.

One Function of Breakeven Analysis Is to