Advanced 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 sug¬ gest how they can be overcome or ameli¬ orated.

LO1