Is the break even point important over the long-run? We spend a lot of time focusing...
Is the break even point important over the long-run? We spend a lot of time focusing on the break even point , but is breaking even sufficient for a firm to survive in the future? Why or why not?
Homework Answers
Break even point is a point of sales where the firm incurs no profit no loss. It is very important for any business to focus on break even point in long term as on thr basis of this only the firm will be able to plan it's price of product, it' capability of raising debt etc.
Break even is not sufficient for future healthy survival but firm must focus on this as this the minimum sale level that firm must meet to prevent losses. Staying at this point does not lead to growth.
Breakeven point analysis is carried by each firm as it gives them the limit to be met to do away with losses, not a healty survival but at break even point a firm is insured to head forward towards profit.
This analysis is very important in following ways
1 budgeting for future ( as at least this level will be aimed to be acheived)
2 On above basis the borrowing will be planned.
Thus, keeping the back of break even point is very iportant for all business firms in long run to grow and prosper.
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Is the break even point important over the long-run? We spend a
lot of time focusing...
A) On the above diagram, indicate the long-run equilibrium (break-even ) point by labeling it E.
Refer to the above graph when answering the following questions. A) On the above diagram, indicate the long-run equilibrium (break-even ) point by labeling it E. B) The long-run equilibrium (break-even ) quantity is_______ units and the long-run equilibrium price is _______ Assume a market price of $10 and a firm pursuing profit maximization. C) Given the market price of $10, on the above diagram, draw and label the perfectly competitive firm's demand curve D) Total revenue at the profit-maximizing output is: E) Total cost at...
By now you all may have read about the meaning of the term "break-even point." It...
By now you all may have read about the meaning of the term "break-even point." It is the level of business activity (volume) where total revenues are just enough to cover total costs, leaving no operating income. In the Cup Theory of Profitability, the break-even point is reached when Sales Dollars are just enough to fill the blue cup AND the yellow cup, leaving the green cup empty. [You can ignore the rest of the information on that page] Why...
Often a firm will calculate the break-even point for a price. That is, if we set...
Often a firm will calculate the break-even point for a
price. That is, if we set the price at $X, then how many units will
we need to sell to cover costs (that is, our break-even point).
Work through the following data and questions to gain a better
understanding of this approach.
QUESTIONS
Start by completing the table below under the assumption that
the product will be sold for $20. (It will be easiest to use Excel
to complete the...
Each product development project can be described as having a break-even point in time. This is...
Each product development project can be described as having a break-even point in time. This is the point on a plot of cumulative cash flow vs. time at which the curve rises to cross the axis at cumulative cash flow = 0 (zero). What is meant by the term 'break-even' in this context? Select the most accurate statement. (Choose one.) O a. The break-even point represents the time after product launch at which the annual profit earned rises to become...
Problem 7-1 Sensitivity Analysis and Break-Even Point We are evaluating a project that costs $1,160,000, has...
Problem 7-1 Sensitivity Analysis and Break-Even Point We are evaluating a project that costs $1,160,000, has a ten-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 44,000 units per year. Price per unit is $45, variable cost per unit is $20, and fixed costs are $645,000 per year. The tax rate is 35 percent, and we require a return of 20 percent on this project....
Problem 9-1 Sensltivity Analysis and Break-Even Point We are evaluating a project that costs $650,000, has...
Problem 9-1 Sensltivity Analysis and Break-Even Point We are evaluating a project that costs $650,000, has a five-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 47,000 units per year. Price per unit is $56, variable cost per unit is $26, and fixed costs are $845,000 per year. The tax rate is 35 percent, and we require a return of 10 percent on this project....
7. Despite Break-even analysis is a useful tool to find out the break-even point, it has...
7. Despite Break-even analysis is a useful tool to find out the break-even point, it has a number of assumptions. Which of the following is incorrect? Course teacher: Steve Lam Course Assessment 3 A Total costs and total revenues do not have linear functions of output B Assuming costs can be classified into either fixed or variable elements C The analysis only considers the decision at the relevant range D Volume is the only factor affecting costs, and all other...
Question 1 (1 point) 1. The short run is a period of time in which the...
Question 1 (1 point) 1. The short run is a period of time in which the amount of output is fixed. nothing the firm does can be altered. the quantity of at least one factor of production is fixed. prices and wages are fixed. Question 2 (1 point) 2. When the demand for electricity peaks during the hottest days of summer, Florida Power and Light Company can generate more electricity by using more fuel and increasing the working hours of...
1.) Why does a long-run average cost curve with a clear minimum point allow fewer firms...
1.) Why does a long-run average cost curve with a clear minimum point allow fewer firms to compete? Select the correct answer below: a. any firm producing at a different quantity from a clear minimum point will have higher costs. b. any firm that produces the same quantity from a clear minimum point will have higher costs. c. any firm producing at a different quantity from a clear minimum point will have lower costs. d. any firm that produces the...
es in demand will increase shart-run profits but not necessarily long run 7. Price is not...
es in demand will increase shart-run profits but not necessarily long run 7. Price is not the only variable of competition Managers with differentia ed products and budgets for promotion seek to control in a limited way the position of demand curves for their products and services. Some firms spend large amounts on developing and merchandising new products. Others may respond to a price cut of a competitor by increas ing their TV ads. In numerous ways the marketing of...
Often a firm will calculate the break-even point for a
price. That is, if we set the price at $X, then how many units will
we need to sell to cover costs (that is, our break-even point).
Work through the following data and questions to gain a better
understanding of this approach.
QUESTIONS
Start by completing the table below under the assumption that
the product will be sold for $20. (It will be easiest to use Excel
to complete the...
Each product development project can be described as having a break-even point in time. This is the point on a plot of cumulative cash flow vs. time at which the curve rises to cross the axis at cumulative cash flow = 0 (zero). What is meant by the term 'break-even' in this context? Select the most accurate statement. (Choose one.) O a. The break-even point represents the time after product launch at which the annual profit earned rises to become...
Problem 7-1 Sensitivity Analysis and Break-Even Point We are evaluating a project that costs $1,160,000, has a ten-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 44,000 units per year. Price per unit is $45, variable cost per unit is $20, and fixed costs are $645,000 per year. The tax rate is 35 percent, and we require a return of 20 percent on this project....
Problem 9-1 Sensltivity Analysis and Break-Even Point We are evaluating a project that costs $650,000, has a five-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 47,000 units per year. Price per unit is $56, variable cost per unit is $26, and fixed costs are $845,000 per year. The tax rate is 35 percent, and we require a return of 10 percent on this project....
7. Despite Break-even analysis is a useful tool to find out the break-even point, it has a number of assumptions. Which of the following is incorrect? Course teacher: Steve Lam Course Assessment 3 A Total costs and total revenues do not have linear functions of output B Assuming costs can be classified into either fixed or variable elements C The analysis only considers the decision at the relevant range D Volume is the only factor affecting costs, and all other...
Question 1 (1 point) 1. The short run is a period of time in which the amount of output is fixed. nothing the firm does can be altered. the quantity of at least one factor of production is fixed. prices and wages are fixed. Question 2 (1 point) 2. When the demand for electricity peaks during the hottest days of summer, Florida Power and Light Company can generate more electricity by using more fuel and increasing the working hours of...
es in demand will increase shart-run profits but not necessarily long run 7. Price is not the only variable of competition Managers with differentia ed products and budgets for promotion seek to control in a limited way the position of demand curves for their products and services. Some firms spend large amounts on developing and merchandising new products. Others may respond to a price cut of a competitor by increas ing their TV ads. In numerous ways the marketing of...
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