Break-even analysis assumes that:
A)total costs are constant.
B)the average fixed expense per unit is constant.
C)the average variable expense per unit is constant.
D)variable expenses are nonlinear.

Question

Quizplus · Accepted Answer

Break-even analysis assumes that the average variable expense per unit is constant, as it is used to calculate the break-even point by dividing total fixed costs by the contribution margin per unit (sales price per unit minus variable expenses per unit). The other options are either incorrect (total costs may vary with the level of output, and variable expenses may or may not be linear) or incomplete (the average fixed expense per unit is not sufficient to determine the break-even point).

Break-Even Analysis Assumes That