Advantages and Limitations of Linear and Nonlinear Break-Even Models
The break-even point model is a well-known instrument for determining target production, income and costs for the purpose of gaining a zero profit. Although it is a concept that was present in the literature as early as in the late XIX century, the break-even point is applied in the contemporary bus...
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| Format: | Article |
| Language: | English |
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University of Kragujevac
2019-12-01
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| Series: | Economic Horizons |
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| Online Access: | https://horizonti.ekfak.kg.ac.rs/sites/default/files/Casopis/2019_3/EH_2019_3_en_4_DM.pdf |
| _version_ | 1797745866162831360 |
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| author | Danijela Martinovic |
| author_facet | Danijela Martinovic |
| author_sort | Danijela Martinovic |
| collection | DOAJ |
| description | The break-even point model is a well-known instrument for determining target production, income and costs for the purpose of gaining a zero profit. Although it is a concept that was present in the literature as early as in the late XIX century, the break-even point is applied in the contemporary business practice even today. This paper aims to demonstrate the advantages and limitations of the traditional (linear) and contemporary (nonlinear) break-even models. Particular attention is paid to the assumptions needed for a successful application of both models. The frequency of the use of the break-even point, limitations and assumptions were studied on a sample of 100 manufacturing enterprises in Bosnia and Herzegovina. The research study has revealed management’s awareness of the potentials for applying the break-even point concept and the need to use the modern models that include assumptions pertaining to change in the key variables in the model. This results in the need to design such nonlinear, dynamic and stochastic models that best represent the dynamic conditions of contemporary business.
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| first_indexed | 2024-03-12T15:30:04Z |
| format | Article |
| id | doaj.art-f8ec47baba78483abe7f7072c2fbd479 |
| institution | Directory Open Access Journal |
| issn | 1450-863X 2217-9232 |
| language | English |
| last_indexed | 2024-03-12T15:30:04Z |
| publishDate | 2019-12-01 |
| publisher | University of Kragujevac |
| record_format | Article |
| series | Economic Horizons |
| spelling | doaj.art-f8ec47baba78483abe7f7072c2fbd4792023-08-10T09:09:01ZengUniversity of KragujevacEconomic Horizons1450-863X2217-92322019-12-0121322123810.5937/ekonhor1903229MAdvantages and Limitations of Linear and Nonlinear Break-Even ModelsDanijela Martinovic0Faculty of Economics University of Sarajevo, Sarajevo, Bosnia and HerzegovinaThe break-even point model is a well-known instrument for determining target production, income and costs for the purpose of gaining a zero profit. Although it is a concept that was present in the literature as early as in the late XIX century, the break-even point is applied in the contemporary business practice even today. This paper aims to demonstrate the advantages and limitations of the traditional (linear) and contemporary (nonlinear) break-even models. Particular attention is paid to the assumptions needed for a successful application of both models. The frequency of the use of the break-even point, limitations and assumptions were studied on a sample of 100 manufacturing enterprises in Bosnia and Herzegovina. The research study has revealed management’s awareness of the potentials for applying the break-even point concept and the need to use the modern models that include assumptions pertaining to change in the key variables in the model. This results in the need to design such nonlinear, dynamic and stochastic models that best represent the dynamic conditions of contemporary business. https://horizonti.ekfak.kg.ac.rs/sites/default/files/Casopis/2019_3/EH_2019_3_en_4_DM.pdfbreak-even pointlinear and nonlinear modelcost classificationapplication in bosnian and herzegovinian enterprises |
| spellingShingle | Danijela Martinovic Advantages and Limitations of Linear and Nonlinear Break-Even Models Economic Horizons break-even point linear and nonlinear model cost classification application in bosnian and herzegovinian enterprises |
| title | Advantages and Limitations of Linear and Nonlinear Break-Even Models |
| title_full | Advantages and Limitations of Linear and Nonlinear Break-Even Models |
| title_fullStr | Advantages and Limitations of Linear and Nonlinear Break-Even Models |
| title_full_unstemmed | Advantages and Limitations of Linear and Nonlinear Break-Even Models |
| title_short | Advantages and Limitations of Linear and Nonlinear Break-Even Models |
| title_sort | advantages and limitations of linear and nonlinear break even models |
| topic | break-even point linear and nonlinear model cost classification application in bosnian and herzegovinian enterprises |
| url | https://horizonti.ekfak.kg.ac.rs/sites/default/files/Casopis/2019_3/EH_2019_3_en_4_DM.pdf |
| work_keys_str_mv | AT danijelamartinovic advantagesandlimitationsoflinearandnonlinearbreakevenmodels |