1. All costs are classified as either fixed or variable.
2. Fixed costs remain constant within the relevant range.
3. The behavior of total revenues and total costs will be
linear over the
relevant range
4. In case of multiple product companies, the selling prices, costs and proportion of units (sales mix) sold will not change.
5. There is no significant change in the inventory levels during the period under review.
6. Other assumptions:
- Unit selling price will remain constant.
- Unit variable cost will not change.
- There will be no change in efficiency and productivity.