Break-even Point Analysis when Material Prices Fluctuate

Break-even Analysis
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Ambrose Chuks
Accountant, Nigeria

Break-even Point Analysis when Material Prices Fluctuate

How realistic is the adoption of Break-even Point Analysis (BEPA), when the price levels of materials fluctuate a lot?
Is there a way to adopt BEPA so it can accommodate frequent and considerable price changes of raw materials or components?

  Alec Craft
 

Cost-Volume Profit Analysis is the Key

Yes sir there most certainly is. CVP analysis, otherwise known as cost-volume profit analysis, and break-even point analysis are great tools that will help determine the net loss or income of your firm. In CVP analysis, all costs must be determined as variable or fixed costs. If done on a regular basis, it would be much easier to use the break-even point.

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