Why is it important to understand Break-even point in Business Decisions

Break-even point is important for business decisions:

  • As break-even point marks the very lowest level to which activity can drop without putting the life of the company in jeopardy.
  • By understanding break-even analysis, a firm can decide on which following strategies to use in order to increase profit or decrease loss like:
  • Increase sale volume
  • Increase selling price per unit
    • Decrease fixed costs
    • Decrease variable cost per unit

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