proportionally with output. Th is assumption follows directly from assumption 1. 3. Total fi xed cost is constant within the relevant range. Th is assumption, in part, indicates that no capacity additions will be made during the period under consideration. 4. Mixed costs can be accurately separated into fi xed and variable elements. Although accuracy of separation can be questioned, reliable estimates can be developed from the use of regression analysis or the high–low method (as discussed in Chapter 3). 5. Sales and production are equal; thus, there is no material fl uctuation in inventory levels. Th is