Financial and managerial accounting chp20

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In 100 words or more reply to the statement below about break even calcuation

  • The break even calculation identifies the number of sales to be made, (in dollars or units), before all the business expenses are covered and profit begins. (before tax). If you know the unit’s sale price and cost price and the business operating expenses you can calculate the number of units you need to sell before you start making a profit. Breakeven analysis is helpful information when preparing and updating your business plan and can be used to set sales targets. It is important for business to review financial statements regularly to check the margin, markup and breakeven calculations are still correct. Doing this check provides a good way to spot any increase in expenses so they avoid losing money.
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