Mechanical Engineering - Industrial Engineering and Production Management - Discussion

A break-even analysis is an economic tool that is used to determine the cost structure of a company or the number of units that need to be sold to cover the cost. Break-even is a circumstance where a company neither makes a profit nor a loss but recovers all the money spent.

The break-even analysis is used to examine the relationship between fixed cost, variable cost, and revenue. Usually, an organisation with a low fixed cost will have a low break-even point of sale.

Break even analysis is short term analysis because in the long run all cost are variable.

Why not long term?