Which of the following is not a limitation of breakeven analysis: breakeven analysis assumes that:
A)costs and income have a linear relationship over the relevant range,but this will not be true if a business gives volume discounts for sales
B)if the business has multiple products,the sales mix remains constant over time,but this will not be true except in the very short term
C)the number of units produced equals the number sold,but this is not true except in very limited situations
D)none of the above

Question

Quizplus · Accepted Answer

None of the statements given are limitations of breakeven analysis. A is a valid concern but can still be incorporated into breakeven analysis using a weighted average contribution margin. B and C are already taken into account in breakeven analysis by calculating the overall contribution margin and dividing it by the weighted average contribution margin per unit.

Which of the Following Is Not a Limitation of Breakeven