A weakness of break-even analysis is that it assumes:
A) revenue and costs are a linear (constant)function of volume.
B) prices and costs increase when the economy is strong and confidence is high.
C) cost of goods sold goes up as revenue increase.
D) there is no weakness.

Question

Quizplus · Accepted Answer

Break-even analysis assumes that revenue and costs are a linear function of volume, which may not always be the case in reality. Factors such as economies of scale or changes in market conditions can affect these variables and make break-even analysis less accurate.

A Weakness of Break-Even Analysis Is That It Assumes