4.1. Questions Answered by Break-even and Contribution Margin Analysis
Break-even and contribution margin analysis tries to answer these five questions:
What sales volume is required to break even?
What sales volume is necessary to earn a desired profit?
What profit can be expected on a given sales volume?
How would changes in selling price, variable costs, fixed costs, and output affect profits?
How would a change in the mix of products sold affect the break-even and target income volume and profit potential?
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