A Case Study On A Re-look at Break-Even Analysis

(a) Do you agree with Mr. Basak that the break even of 7 lakh Units as arrived at by the finance manager depicts distorted reality?

(b) In case you agree with the views expressed by Mr. Basak, please clarify the conceptual limitation that the break even analysis given in Exhibit II actually suffers from.

(c) Mr. Basak had also commented that the breakeven analysis provided in Exhibit II actually ignores one crucialyet significantcost in relation to the project. What cost is he referring to?

(d) Suggest an alternative method of arriving at a more reliable break-even number and compute such break-even sales (in units).