What is "break-even analysis"? What is decrease/discontinue? How are they related to differential cost analysis?

Break-even analysis is a financial tool used by businesses to determine the point at which total revenue equals total costs, resulting in neither profit nor loss. It helps in understanding how much a company needs to sell in order to cover its expenses.

On the other hand, "decrease/discontinue" is a strategic decision made by a company to either reduce the production or sales of a product or completely stop offering it. This decision is usually made when the product is no longer profitable or lacks demand.

Break-even analysis and decrease/discontinue decisions are related to differential cost analysis because they all involve assessing the costs and benefits associated with different options. Differential cost analysis is a technique used to compare the costs and benefits of alternative courses of action or decisions. It focuses on analyzing the difference in costs and the impact on profitability between different choices.

In the context of break-even analysis and decrease/discontinue decisions, differential cost analysis helps determine whether reducing or discontinuing a product is financially feasible. It involves comparing the costs and revenues associated with continuing production against the costs and revenues that would result from decreasing or discontinuing the product. By analyzing these differential costs, businesses can make informed decisions about whether to continue, decrease, or discontinue a product based on profitability.