Break-even Analysis Advantages And Disadvantages

Question 1

1st advantage of break-even analysis

Answer 1

Easy to work out

Question 2

2nd advantage to break-even analysis

Answer 2

It’s quick. This means that if businesses decide they want to increase their margin of safety,they can take immediate action to increase sales or reduce costs to do that

Question 3

3rd advantage to break-even analysis

Answer 3

It allows businesses to predict how changes in sales may affect costs ,revenue and profits,and how changes in price and costs will affect sales

Question 4

4th advantage of break -even

Answer 4

Businesses can use break-even analysis to help persuade the bank to give them a loan

Question 5

5th advantage of break-even analysis

Answer 5

It can stop businesses from releasing products that might be difficult to sell in large quantities

Question 6

1st disadvantage of break-even analysis

Answer 6

Is assumes that the firm can sell any quantity of the product at the current price

Question 7

2nd disadvantage of break-even analysis

Answer 7

Assumes that all products are sold without any waste

Question 8

3rd disadvantage of break-even analysis

Answer 8

If the data is wrong,then the results of the analysis will be wrong

Question 9

4th disadvantage of break-even analysis

Answer 9

It can be complicated if it involves more than one product

Question 10

5th disadvantage of break-even analysis

Answer 10

It only shows how much a business needs to sell,and not how much it will sell