Business Studies – 4.4.3 Break-even analysis | e-Consult
4.4.3 Break-even analysis (1 questions)
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Break-Even Chart:
| Number of Units | ||
| 0 | 500 | 1000 |
Explanation:
- Break-Even Point: The break-even point of 500 units means that ABC Ltd needs to sell 500 units to cover all its costs.
- Practical Implications: In practical terms, this means that ABC Ltd must achieve a sales volume of at least 500 units per year for the new product to avoid making a loss.
- If sales are below 500 units, the company will incur a loss.
- If sales are above 500 units, the company will make a profit.
- This information is essential for ABC Ltd to assess the viability of launching the new product and to set realistic sales targets. They need to consider whether they can realistically achieve a sales volume of 500 units.