What are the limitations in using break-even analysis? What will be a

What are the limitations in using break-even analysis?

What will be an ideal response?

ANSWER

It requires the use of linear cost and revenue functions; it isn’t applicable if the functions are non-linear. It assumes that there are fixed costs, which means the analysis can be applied only to short-run operations. It can’t handle multiple product situations, unless the product mixes are constant. It can’t be used to determine profit-maximizing levels of operations.