This document outlines the assumptions of break-even point analysis, including that total costs are classified as fixed or variable and ignore semi-variable costs, cost and revenue functions are linear, price and sales volume are constant, fixed costs do not change with volume, variable costs increase at a constant rate, technology and efficiency do not improve, input prices are stable, and product mix remains constant for multi-product firms.

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.