Consider the following questions:
QUESTION 1. Two companies have identical products, total fixed costs and variable costs per unit, yet one company is able to set a much lower price for its product and still be as profitable as the other company Explain how this can happen.
QUESTION 2. A car rental company rents small, medium and family-sized cars. What assumptions would be made for the purpose of a cost volume profit analysis? Does this mean that CVP analysis is of little value to this business? Explain your answer.