The accountant’s approach to cost–volume– profit analysis has been criticized in that, among other matters, it does not deal with the following:
(a) Situations where sales volume differs radically from production volume;
(b) Situations where the sales revenue and the total cost functions are markedly non-linear;
(c) Changes in product mix;
(d) Risk and uncertainty.
Explain these objections to the accountant’s conventional cost– volume–profit model and suggest how they can be overcome or ameliorated.