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    Sensitivity and Break-even Analyses

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    Describe how Sensitivity Analyses interact with Break-even Analyses.

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    Break even point

    Break even quantity = Fixed costs/Contribution per unit
    Here contribution per unit= Sales per unit -Variable cost per unit
    Break even point is the point at which gains equal losses.
    Break-even analysis is basically an analytical technique for studying the relations between:

    * fixed costs;
    * variable costs; and
    * profits.
    Break-even analysis is a device for determining the point at which sales will just cover total costs.
    or the break even point for a product is the point where total revenue received equals total costs (TR=TC). A break even point is typically calculated in order to determine if it would be worthwhile to sell a proposed product, or to try to figure out ...

    Solution Summary

    The solution discusses the relationship between sensitivity and break-even analyses.