Break-Even Analysis

Date of Award


Document Type


Degree Name

Master of Science in Accounting



First Advisor

Robert McDonald


Break-even analysis, Cost accounting

Call No. at the Univ. of New Haven Library

AS 36 .N29 Acc. 1987 no. 9


Break-even analysis is one of the most important tools to determine the effectiveness and efficiency of any company.

The Break-even analysis is the study of the relationship between costs (fixed, variable and semivariable) and budgeted revenue to determine how changes in each affect profit.

During the last fifty years, increasing attention has been given to the break-even analysis for its significance in cost and managerial accounting. Two basic assumptions regarding the break-even analysis are the economist's and the account's assumptions. On the economist's view the variable cost per unit and the selling price are not constant because over the time, the products sold by the companies change in quantity and quality, while under the account's view the selling price and variable cost per unit are constant or linear.

The break-even analysis plays an important role in decision making, such as determining the selling prices, volume of production, and performance evaluation.