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Business Finance EBK HEALTHCARE FINANCE: AN INTRODUCTION

To state : The purpose of break even analysis. Introduction: Income Statement’ shows the revenue earned and expenses incurred over a period of time. It is used to evaluate the net income generated in a particular period. Break even volume is the volume of goods/units that should be produced for a firm to maintain ‘no profit, no loss’ situation (i.e., situation of no gain and no loss). It can be computed by dividing fixed costs with the contribution margin. Following is the equation for volume breakeven: Breakeven ( volume ) = FC CM Breakeven ( volume ) = FC ( R – VC ) wherein, FC = Total Fixed costs VC = Variable costs per unit R = Revenue per unit CM = Contribution margin The purpose for a break even analysis is to determine the minimum output a firm shall produce to cover its variable and fixed expenses for a particular period. This further helps the firm to understand the minimum output required if a target profit is to be achieved for a period. It is an indicator for the earnings using the sales output.

To state : The purpose of break even analysis. Introduction: Income Statement’ shows the revenue earned and expenses incurred over a period of time. It is used to evaluate the net income generated in a particular period. Break even volume is the volume of goods/units that should be produced for a firm to maintain ‘no profit, no loss’ situation (i.e., situation of no gain and no loss). It can be computed by dividing fixed costs with the contribution margin. Following is the equation for volume breakeven: Breakeven ( volume ) = FC CM Breakeven ( volume ) = FC ( R – VC ) wherein, FC = Total Fixed costs VC = Variable costs per unit R = Revenue per unit CM = Contribution margin The purpose for a break even analysis is to determine the minimum output a firm shall produce to cover its variable and fixed expenses for a particular period. This further helps the firm to understand the minimum output required if a target profit is to be achieved for a period. It is an indicator for the earnings using the sales output.

Solution Summary: The author explains the purpose of break even analysis, which is to determine the minimum output a firm shall produce to cover its variable and fixed expenses.

EBK HEALTHCARE FINANCE: AN INTRODUCTION

EBK HEALTHCARE FINANCE: AN INTRODUCTION

6th Edition

ISBN: 9781567937428

Author: Gapenski

Publisher: YUZU

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Chapter 5, Problem 4.3STQ

Chapter 5, Problem 5.2STQ

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Chapter 5 Solutions

EBK HEALTHCARE FINANCE: AN INTRODUCTION

Ch. 5.1 - Prob. 1.1STQ Ch. 5.1 - Prob. 1.2STQ Ch. 5.1 - Prob. 1.3STQ Ch. 5.1 - Prob. 2.1STQ Ch. 5.1 - Prob. 2.2STQ Ch. 5.1 - Prob. 2.3STQ Ch. 5.1 - Prob. 2.4STQ Ch. 5 - Prob. 1.1STQ Ch. 5 - Prob. 1.2STQ Ch. 5 - Prob. 2.1STQ

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