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1. How linear profit models relate to GAAP basis income statement

Both the linear profit models and GAAP are used for profit maximization or cost

minimization. They are both used by managers in decision making as well as controlling the

activities of the organization. Also, they are both used in developing external reports. The

linear profit models are prepared using the guidelines laid down by GAAP which is used in

standardizing and regulating the linear programming models.

2. The limitations of using the linear profit model regarding qualitative considerations, as it

applies to Burger king example

The linear profit model assumes; constant sale prices, constant variable costs, and

constant total fixed costs. It also assumes that the unit sold is equal to the units produced.

Due to this, Recession favored McDonalds over BK. When shares in McDonalds were

rising reaching an all-time high, the shares in Bk have fallen for five successive quarters.

This is mainly because a linear profit model assumes constant returns.

3. These limitations are present in all linear profit models. All linear models assume similar

characteristics; this means that all the above restrictions affecting the Burger King

company will affect other companies similarly using the linear profit model.

4. Despite all the above limitations, it might be useful to frame Burgers king profitability

problems using a linear profitability model due to its simplicity and ease of
understanding. Its also adaptive and more flexible to analyze issues using this model.

Burger King might also find it useful since it is suitable for solving complex problems.