A major assumption of breakeven analysis and one which causes severe limitations in its use is that ________.
A) fixed costs really are fixed
B) total revenue is nonlinear
C) revenues and operating costs are linear
D) all costs are really semi-variable

Question

Quizplus · Accepted Answer

Breakeven analysis assumes that revenues and operating costs are linear, meaning they change at a constant rate relative to production and sales levels. This simplification can limit the analysis's accuracy in real-world scenarios where costs and revenues may not behave linearly.

A Major Assumption of Breakeven Analysis and One Which Causes