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Breakeven Analysis and Usefulness

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"Breakeven analysis isn't very useful to a company because companies need to do more than break even to survive in the long run. Explain why you agree or disagree.

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Solution Summary

The solution discusses the usefulness of breakeven analysis in a positive viewpoint. References are included.

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Breakeven analysis is very useful to a company because it helps in determining the volumes required to achieve no profit- no loss situation. It is a useful tool of management accounting. It is calculated by following formula:
= Fixed costs/ Contribution Margin ...

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