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ASSUMPTIONS OF BREAK EVEN ANALYSIS
1. Fixed costs for all time remain constant.
2. All costs are divided into fixed and variable costs.
3. Selling price will not alter despite competition.
4. Variable costs SVD change in direct proportion to production.
5. There is no alteration in common price level.
6. There is no alteration in operating efficiency.
7. Quantity of production is the only affecting factor.
8. Quantity of sales and volume of production are equal.
9. Only one product or sales mix is same.
Using the information below, list profit statements for June and July using (a) margin costing and (b) absorption costing. A company produces and sells 1 product only which
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This question tested their knowledge of intended reporting but more importantly requisite them to apply their knowledge and consider the impact from the investors' perspective.
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