Break-Even analysis is a tool used by businesses to forecast the profit/loss a business could make depending on the quantity of goods or services sold.
When studying Break-Even Analysis you need to understand the limitations of it as a decision making tool. Break-Even Analysis is quite a simplistic tool that does not take into account external factors such as the sale of competitor's products. It assumes that all products/services produced will be sold. Break-Even Analysis requires the use of charts which need to be manipulated according the changes in price that will be charged.