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Flashcards in Accounting and Finance Deck (2)
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1

3 benefits of break even analysis

- easy to view
- can assess the consequences of change using margin of safety
-shows the level of profit at a given level of output

2

3 disadvantages of break even analysis

- based on predicted figures
-a manufacturer might negotiate prices from buying in bulk, therefore the direct/variable costs may change
- calculating relies on one price, there may be discounts offered to customers