Assumptions underlying break even analysis

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Rakesh Sahu asked over 3 years ago

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Data?1494421730 rohit awasthi answered over 3 years ago

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. Thanks

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