Which of the following is the main problem with breakeven analysis?
A)It fails to consider customer value and the relationship between price and demand.
B)It fails to consider the impact of sales volume on price.
C)The method of estimating breakeven point is highly arbitrary.
D)Variable costs cannot be estimated accurately.
E)Neither fixed nor variable costs can be accurately estimated.

Question

Quizplus · Accepted Answer

The main problem with breakeven analysis is that it fails to consider customer value and the relationship between price and demand. It assumes that sales volume is the only factor that affects profit, when in reality, price and demand also play a significant role in determining profitability. Therefore, breakeven analysis may not be effective in situations where the market conditions are constantly changing or when there is significant competition in the market.

Which of the Following Is the Main Problem with Breakeven