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What are the weaknesses of cvp analysis

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Question - A company produces T-shirt and sells them for $10 each. The marginal cost (ie., variable) of production is $6 each and fixed costs are $400 per annum. The tax rate is 25%.

Assume that the Company intends to expand operations over the original scenario, and thus enters into a 20 years lease at $1,000/ month. It expects to increase the cost of its T-Shirts to $12/ shirt, and reduce variable costs by $1/ shirt. It also expects to earn a net income of $3/ unit. What is the required sales (in $ and units).

What are the weaknesses of CVP analysis (identify 4).

Reference no: EM132637121

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