Linear break-even analysis assumes that costs are linear functions of volume.

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Linear break-even analysis assumes that costs are linear functions of volume, meaning that costs increase proportionally with the increase in volume. This is the basic assumption of break-even analysis, which helps in determining the minimum level of sales required to cover all the costs and expenses incurred in the production process. Therefore, the linear relationship between volume and cost is an essential assumption in the break-even analysis.

Linear Break-Even Analysis Assumes That Costs Are Linear Functions of Volume