A Break-Even Analysis is best used as a preliminary planning tool. We can use break-even analysis to examine theopportunity cost of investing in the equipment as a capital expense, as opposed to investing the money in something else. It can also be used to study a product that gives a betterReturn on Investment(RoI). But it is argued that it is restrictive in what it includes in the calculation. Cost and revenue calculations can be much more complex than those considered in a Break-Even Analysis. Material costs and other costs can change dramatically, and it is not always clear which fixed costs should be included.

If you were to use Break-Even Analysis as a tool to make decisions, what areas would you use it, and what difficulties you may face?