Basic break-even analysis typically assumes that:
A)revenues increase in direct proportion to the volume of production,while costs increase at a decreasing rate as production volume increases.
B)variable costs and revenues increase in direct proportion to the volume of production.
C)both costs and revenues are made up of fixed and variable portions.
D)costs increase in direct proportion to the volume of production,while revenues increase at a decreasing rate as production volume increases because of the need to give quantity discounts.
E)All of the above are assumptions in the basic break-even model.

Question

Quizplus · Accepted Answer

Basic break-even analysis assumes that variable costs and revenues increase in direct proportion to the volume of production, meaning that as production increases, both variable costs and revenues increase linearly.

Basic Break-Even Analysis Typically Assumes That