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Three of the following are assumptions of break-even analysis. The exception is

  • A.that price per unit is constant
  • B.that variable cost per unit is constant
  • C.that production equals sales
  • D.that the sales mix varies with volume

Answer: D

Correct answer: that the sales mix varies with volume

The analysis assumes the mix is constant, since a weighted average contribution can only be computed at a stated mix. The other three are genuine assumptions: constant price per unit, constant variable cost per unit, and production equal to sales so that no fixed cost is carried forward in stock.

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