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3 answers

To ensure that they know the level of income they need to match their expenditure.
To ensure they are operating at a profit.
To check if costs are rising faster than profits.

2007-09-27 10:11:54 · answer #1 · answered by Ahwell 7 · 0 0

This would normally be done before committing to production of a new product in order to determine at what point they can expect to make a profit.

NB> In the 'real world' few businesses actually do this .. it's typically impossible to calculate because costs can't be measured .. especially it's virtually impossible to measure variable costs until you actually start producing variable quantity .... and price is determined by the market, which varies all the time, and not by the accountants :-)
(Example:- iPhone .. I bet the 'breal-even' point collapsed when Apple had to knock $100 off the price ...)

2007-09-27 19:47:22 · answer #2 · answered by Steve B 7 · 0 0

Every company tries to make a profit.If they break even then they really have worked for nothingAnd will not be able to make company grow.

2007-10-02 20:25:35 · answer #3 · answered by coxycoxon 1 · 0 0

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