Which of the following is an assumption of break-even analysis?
A)Fixed expenses remain constant for all levels of sales volume.
B)Variable expenses change in direct proportion to changes in sales volume.
C)Changes in sales volume have no effect on unit sales price.
D)All of the above

Question

Quizplus · Accepted Answer

All three statements are assumptions of break-even analysis. Fixed expenses must remain constant for all levels of sales volume in order to accurately calculate the break-even point. Variable expenses are assumed to change proportionally to changes in sales volume, as it is based on the assumption of a linear relationship between sales and expenses. Finally, changes in sales volume should not affect the unit sales price, as break-even analysis assumes that the price remains constant.

Which of the Following Is an Assumption of Break-Even Analysis