Application of Break-even Analysis
Imagine working for an organization for a few years and, at first, you are enjoying the experience. But, as time goes on, the conditions seem to worsen, perks continue to disappear, and the managers’ impatience seems to increase. After another round of layoffs, you find yourself in a management position that finally provides you with an insight into the organization’s finances. You find that for every project your organization takes on, there is an average of a 5% financial loss. You realize that, when pricing was originally determined, the organization did not do its due diligence in determining how many resources it would take to complete a project. The first step toward a sustainable and then profitable organization would have been to determine the break-even point for a project. For this Discussion, you will use an example from your professional or personal life to consider the usefulness of break-even analysis to help with your decision making.
To prepare for this Discussion:
- Consider an example of how you could use break-even analysis (creativity is welcome!) to help you make a decision in your professional or personal life and how understanding the break-even point could help you make better decisions.
Post an analysis of the usefulness of break-even analysis in supporting decision making, to include the following: ( Answer 300 words or more)
- Describe an example from your professional or personal life in which you might use break-even analysis to support a decision.
- Analyze why and how understanding the break-even point would help in making an effective decision.
- In considering your example, identify what elements you might consider to improve the break-even point.
