Final answer:
Breakeven analysis can help Nadia identify sales volume to cover costs, assess the impact of increasing prices or reducing costs, and assist in deciding whether diversifying her product range could make her business more profitable.
Step-by-step explanation:
Using breakeven analysis could help Nadia ensure her business is successful by identifying the level of sales she needs to cover her costs. This analysis will assist in making informed decisions about pricing, cost control, and product range diversification.
Increasing Product Prices
By calculating the breakeven point, Nadia could assess the impact of increasing product prices on her overall profitability. If current prices aren't covering costs, a price hike may be needed to reach a profitable margin.
Reducing Production Costs
Alternatively, reducing production costs could help Nadia reach the breakeven point more easily. This may involve negotiating with suppliers, reducing waste, or finding more efficient production methods.
Identifying Revenue Equals Costs
Identifying the point where revenue equals costs is essential for Nadia to know the minimum amount of sales needed to avoid losses. This knowledge serves as a basis to formulate strategies to enhance business operations and financial health.
Diversifying Product Range
Lastly, by analyzing the potential impact of diversifying her product range, Nadia could determine if offering a wider variety of items would help spread risk and increase sales, therefore improving the chance of operating above the break-even point.