Introducing Learning by Doing into the Break-Even Analysis Model

Authors

  • Michael B. Tannen University of the District of Columbia

DOI:

https://doi.org/10.33423/jaf.v20i3.3006

Keywords:

Accounting, Finance, breakeven analysis, cost-volume -profit, target profit, outsourcing, learning by doing, experiential learning

Abstract

Break-even analysis is widely used in helping managers anticipate how output changes affect profitability. Warnings abound, however, in relying too heavily upon implications drawn because strong assumptions in the model may limit applicability. This paper focuses on relaxing the assumption that variable cost per unit is constant, inconsistent with ergonomic emphasis on learning.

The analysis below indicates the effect of learning on output needed to: (1) break-even, (2) achieve a target profit, and (3) choose the make rather than buy decision. Including learning does complicate the analysis, but as shown, it need not be much more difficult to use.

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Published

2020-08-23

How to Cite

Tannen, M. B. (2020). Introducing Learning by Doing into the Break-Even Analysis Model. Journal of Accounting and Finance, 20(3). https://doi.org/10.33423/jaf.v20i3.3006

Issue

Section

Articles