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Question 11.A.3: Can you think of reasons why the managers of a business migh...

Can you think of reasons why the managers of a business might find it useful to know the break-even of some activity they are planning?

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Being able to deduce the break-even point is useful for comparing the planned or expected level of activity with the breakeven point, and for determining the riskiness of the activity. Operating only just above the required level of activity to break even may indicate that it is a risky venture, since only a small fall from the planned level of activity could lead to a loss.

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