INTERVIEW QUESTIONS COMMERCE CS DETAILS

Question: What are the various uses for break-even analysis?

Answer: Such analysis allows the firm to determine at what level of operations it will break even (earn zero profit) and to explore the relationship between volume, costs, and profits. It helps the management that at current costs of products how many numbers of units must be sold to recover the cost of producing the product.

For Example: If you spend, $200 on producing a product and selling price is $20 then you must sale 10 units to recover the cost of product.

It also helps the management to determine how much of units to be sold to get desired profit on product. For example: if in the above example you want to earn $20 profit then add it to it's cost of $200 and it will become $220 now you need to earn profit of this $20 you need to sale 11 items of product.

As the word break even analysis is defined as the equilibrium point at where supply and demand intersect each other and at that price we fix our price and that point is also known as break even point. and with the help from that we can exactly fix the cost.

Such analysis allows the firm to determine at what level of operations it will break even (earn zero profit) and to explore the relationship between volume, costs, and profits. It helps the management that at current costs of products how many numbers of units must be sold to recover the cost of producing the product.

For Example: If you spend, $200 on producing a product and selling price is $20 then you must sale 10 units to recover the cost of product.

It also helps the management to determine how much of units to be sold to get desired profit on product. For example: if in the above example you want to earn $20 profit then add it to it's cost of $200 and it will become $220 now you need to earn profit of this $20 you need to sale 11 items of product.

As the word break even analysis is defined as the equilibrium point at where supply and demand intersect each other and at that price we fix our price and that point is also known as break even point. and with the help from that we can exactly fix the cost. Source: CoolInterview.com

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