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Breakeven Analysis
book

Breakeven Analysis

by Michael E. Cafferky, Jon Wentworth
August 2014
Intermediate to advanced content levelIntermediate to advanced
172 pages
3h 14m
English
Business Expert Press
Content preview from Breakeven Analysis

APPENDIX B

Limitations and Criticisms

The breakeven concept and the techniques of cost-volume-profit analysis are powerful business tools. Understanding them and applying them correctly can be an important part of achieving success in business. However, these tools, powerful as they are, have their limitations. Recognizing these limitations is essential to correctly understanding and using cost-volume-profit analysis.1 Here are the commonly recognized limitations:

Linearity. The first limitation is that revenues and costs are assumed to be linear. That means the selling price per unit would never change and every customer would pay exactly the same price per unit. It also means that variable costs would be exactly the same for every unit. There ...

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Publisher Resources

ISBN: 9781631570919