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Business Finance EBK HEALTHCARE FINANCE: AN INTRODUCTION

The reason for conducting breakeven analysis in an iterative manner. Introduction: Break even analysis refers to the calculation that provides a volume of sales needed to cover the cost above which the company would earn profits and below which company will bear loss because the production would not be profitable. Break even analysis emphasis on the relationship towards profit, variable cost and fixed cost. The break even analysis takes place in an iterative manner so that manager can identify if the volume of breakeven can be ascertained with the price assumed. The reason behind the conduct of break even analysis in the iterative manner is to help manager identify whether the breakeven volume computed so far can be attained realistically at the price estimated in the analysis. The manager is required to assume a new price and repeat the entire break even analysis if the price comes out to be unreasonable for the breakeven volume. In a similar arrangement, the cost and operational estimates are required to be altered and repeat the entire break even analysis if the cost structure being taken into consideration for computation of the break even comes out to be unrealistic at the break even volume.

The reason for conducting breakeven analysis in an iterative manner. Introduction: Break even analysis refers to the calculation that provides a volume of sales needed to cover the cost above which the company would earn profits and below which company will bear loss because the production would not be profitable. Break even analysis emphasis on the relationship towards profit, variable cost and fixed cost. The break even analysis takes place in an iterative manner so that manager can identify if the volume of breakeven can be ascertained with the price assumed. The reason behind the conduct of break even analysis in the iterative manner is to help manager identify whether the breakeven volume computed so far can be attained realistically at the price estimated in the analysis. The manager is required to assume a new price and repeat the entire break even analysis if the price comes out to be unreasonable for the breakeven volume. In a similar arrangement, the cost and operational estimates are required to be altered and repeat the entire break even analysis if the cost structure being taken into consideration for computation of the break even comes out to be unrealistic at the break even volume.

Solution Summary: The author explains the reason behind the conduct of breakeven analysis in an iterative manner to help manager identify whether the volume of brokeneven can be attained realistically at the price estimated in the analysis.

EBK HEALTHCARE FINANCE: AN INTRODUCTION

EBK HEALTHCARE FINANCE: AN INTRODUCTION

6th Edition

ISBN: 9781567937428

Author: Gapenski

Publisher: YUZU

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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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