Rakesh Sahu
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rohit awasthi
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Dear Friend
> Assumptions underlying break even analysis
1. Total costs can be easily classified into Fixed and Variable categories.
2. Selling Price per unit remain constant, irrespective of quantity sold.
3. Variable Costs per unit remain constant. However total variable costs increase as output increases.
4. Fixed Costs for the period remains same irrespective of output.
5. Productivity of the factors of production will remain the same.
6. The state of technology process of production and quality of output will remain unchanged.
7. There will be no significant change in the level of opening and closing inventory.
8. The company manufactures a single product. In the case of a multi-product company, the sales-mix remains unchanged.
9. Both revenue and cost functions are linear over the range of activity under considerations.
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