Assumption of BEP.pdf

Break even analysis

1. ASSUMPTION OF BREAK
EVEN POINT ANALYSIS

2. •The total cost may be Classified Into fixed and variable Costs it ignored
semi variable cost
•The cost and revenue functions remain linear.
•(iii) The price of the product is assumed to be constant.
•(iv) The volume of sales and volume of production are equal.
•(v) The fixed costs remain constant over the volume under
consideration.
•(vi) It assumes constant rate of increase in variable cost.
•(vii) It assumes constant technology and no improvement in labour
efficiency.
•(viii) The price of the product is assumed to be constant.

3. •(ix) The factor price remains unaltered.
•(x) Changes in input prices are ruled out.
•(xi) In the case of multi-product firm, the product mix is stable.