Explain break-even analysis and its uses in pricing decisions.

Explain break-even analysis and its uses in pricing decisions.

• A. Break-even analysis determines the units needed to cover costs at a given price; helps set target volumes and evaluate profitability under different scenarios.
• B. Break-even analysis is only used for budgeting, not pricing.
• C. Break-even analysis computes maximum profit but not required volumes.
• D. Break-even analysis ignores fixed costs.

Answer: (A)