Break - Even Analysis in detail....
Answers
what do you mean.......................................,
In Microeconomics,Break Even Analysis provides a framework for the firm or company to understand how much of a product or service it will sell to cover at least the minimum fixed cost of production.
Explanation:
It is evident for any business organisation or company that if it is not able to cover at least the fixed cost of production in business,then it is practically going through bankruptcy and may well shut down in near future.Break even point basically indicates the interaction between the sales revenue,variable cost and fixed cost of production for any firm or company.It implies at what level of production,the company's revenue is enough or sufficient to cover at least the fixed cost of production in business.At this level,note that the company is not able to cover anything more than the fixed cost,that is,variable cost of production.Hence,lower the fixed cost of production for any company or firm,the lower will be its break even point.