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1- quantity of units produced = quantity of unit sold , so there is no change in invetory . 2- prices will remain fixed. 3- variable cost rate will remain fixed 4- total fixed costs will remain fixed up to maximum manufacuring capacity of the firm

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Q: What are underlying assumptions in break even point analysys?
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Does cvp differs from break even analysis?

though CVP and break-even analysis are both based on the same assumptions their objectives are not the same. In a sense that, the underlying objective of breakeven analysis is determine the output level that will not result in neither profit nor loss (breakeven point), where total sales will be equal to total cost ( total sales = (total variable + total fixed cost)). On the other hand, Cvp analysis seeks to determine what will be the effect on sales, cost and profit when there is a change in activity level (output).


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