The purpose of breakeven analysis is to identify:

Breakeven analysis is a financial assessment used to determine the point at which total revenues equal total costs, resulting in neither profit nor loss. This concept is crucial for businesses because it helps in understanding the minimum output level required to avoid losses.

By focusing on the point where costs and revenues are equal, organizations can make informed decisions regarding production levels, pricing strategies, and financial planning. This knowledge assists businesses in setting sales targets and evaluating the impacts of varying costs and market conditions on profitability.

Understanding the breakeven point is vital for effective budgeting and resource allocation, as it provides clarity on the financial viability of products or services offered. It does not, however, provide information about maximum production levels, where revenue exceeds costs, or ideal pricing strategies, all of which are different aspects of operational and financial management.