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Cost-volume-profit analysis is used to make many decisions, including product pricing and controlling costs. What assumptions are used in cost-volume-profit analysis? Are these assumptions always valid? Why do managers put such a great amount of emphasis on controlling fixed costs in their organizations? What is meant by the statement, my company has good operating leverage? How does good operating leverage magnify earnings results with modest revenue increase? What are the limitations of using operating leverage to predict profitability?

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