Which of the following is a limitation of breakeven analysis?
A) Consumer demand for products or services is not considered.
B) The analysis fails to separate fixed costs from variable costs.
C) The calculations assume that per-unit variable costs will change as different amounts are produced.
D) It is difficult to understand and apply.

Question

Quizplus · Accepted Answer

Breakeven analysis does not take into account consumer demand for products or services, which is a significant limitation. It focuses on the financial aspects of production costs and sales needed to cover those costs, without considering how market demand might affect the ability to sell the required number of units.

Which of the Following Is a Limitation of Breakeven Analysis