Question 1
Break-even analysis can be used by a firm that produces more than one product, but
◦ each product has its own break-even point.
◦ the firm must allocate some fixed cost to each of the products.
◦ the results are estimates, not exact values.
◦ the results are never accurate.
◦ the break-even point depends upon the proportion of sales generated by each of the products.
Question 2
The basic break-even model can be modified to handle more than one product. This extension of the basic model requires
◦ price and variable cost for each product, and the percent of sales that each product represents.
◦ price and sales volume for each product.
◦ sales volume for each product.
◦ that the ratio of variable cost to price be the same for all products.
◦ that the firm have very low fixed costs.
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