The success of a business is generally attributable in great measure of the ability of its management personal to cope with probable conditions of the future. Short range as well as long-term plans must be made accomplished through sound management evaluation. However, many aids have been controlling and co-ordinating the function of their business. One of the tool which encompasses vital and needed information in guiding companies profit path is the Break-Even theory. This is an extension of marginal costing; basically. It is concerned with the point at which revenue and costs intercedes, hence the term “Break – Even”.
Break-Even system is a simple and easily understandable method of picturing to the management the effect of changes in volume on profits. It predicts the effects of managerial actions today on future profits and company survival. Business people do not view costs outputs and profits may be affected by their actions. With the aid of Break-Even theory, they will be able to understand more and data revealed by the Break-Even analysis. This system involves the marshalling of the cost – volumer – profit data and other data to guide manager in its day-to-day decisions. Some of the data are best seen in a chart form for management to get a perspective view of the profit structure.
Moreover, at the beginning of the century a planning tool was developed by WALTER RAUTENSTRAUCH called the Break-Even chart. This development made a major contribution as a management aid in profit planning, forecasting and decision-making. The concept show the significance in a firm between it’s costs, volume and relationship between the costs, illustrate the relationship between the cost, that-the selling price is constant irrespective of the volume.
Ugwu, A. (2018). BREAK-EVEN THEORY AND ACCOUNTING AS A MANAGEMENT DECISION A TOOL (A CASE STUDY OF NIGERIAN HOECHST PLC). Afribary. Retrieved from https://afribary.com/works/break-even-theory-and-accounting-as-a-management-decision-a-tool-a-case-study-of-nigerian-hoechst-plc-7299
Ugwu, Anderson "BREAK-EVEN THEORY AND ACCOUNTING AS A MANAGEMENT DECISION A TOOL (A CASE STUDY OF NIGERIAN HOECHST PLC)" Afribary. Afribary, 29 Jan. 2018, https://afribary.com/works/break-even-theory-and-accounting-as-a-management-decision-a-tool-a-case-study-of-nigerian-hoechst-plc-7299. Accessed 30 Nov. 2022.
Ugwu, Anderson . "BREAK-EVEN THEORY AND ACCOUNTING AS A MANAGEMENT DECISION A TOOL (A CASE STUDY OF NIGERIAN HOECHST PLC)". Afribary, Afribary, 29 Jan. 2018. Web. 30 Nov. 2022. < https://afribary.com/works/break-even-theory-and-accounting-as-a-management-decision-a-tool-a-case-study-of-nigerian-hoechst-plc-7299 >.
Ugwu, Anderson . "BREAK-EVEN THEORY AND ACCOUNTING AS A MANAGEMENT DECISION A TOOL (A CASE STUDY OF NIGERIAN HOECHST PLC)" Afribary (2018). Accessed November 30, 2022. https://afribary.com/works/break-even-theory-and-accounting-as-a-management-decision-a-tool-a-case-study-of-nigerian-hoechst-plc-7299