Since its introduction in the 19th century, the breakeven concept has been used, enhanced, adjusted, and extended in an attempt to reduce or correct for its limitations and make it applicable to more and more business situations. In spite of its limitations and criticisms, detailed in Appendix B, breakeven analysis (also known as cost-volume-profit analysis) continues to be one of the best ways to focus on the relationship between cost, volume, and profitability. We present here the applications and approaches that we believe managers will find most useful.

The Essence of Breakeven Analysis

Cost-volume-profit analysis is not just the mathematical result generated by applying a particular math formula. It is not merely a ...

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