Break Even Flashcards
1
Q
What are the 2 limitations of break even analysis.
A
Asumptions of constant lost/revenue:= break eevn analysis assumes that cost and revenue remain constant. Which may not be realistic in the real world. Where prices and cost can fluctuate
Simplistic assumptions:= the break even assumes all units are sold. Which may not be realistic, due to varying(changes) market demand.. leading to overestimating(judge) of sales revenue and inaccurate financial plans
