CVP Analysis (2) Flashcards

1
Q

Benefits of a breakeven analysis?

A

A useful technique for maangers as it can provide simple and quick estimates.

Therefore useful for assessing risk surronding the estimate of sales volume

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2
Q

Limitation of a breakeven analysis (cosntant mix)?

A

If there are multiple products, they are sold in a constant mix

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3
Q

Limitation of a breakeven analysis (All costs)?

A

All costs can be split into fixed and variable elements

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4
Q

Limitation of a breakeven analysis (Fixed)?

A

Fixed costs are constant

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5
Q

Limitation of a breakeven analysis (Variable)?

A

Variable cost per unit is constant

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6
Q

Limitation of a breakeven analysis (Selling)?

A

Selling price is constant

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7
Q

Limitation of a breakeven analysis (Inventory)?

A

Inventory levels are constant

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