Which one of the following is not an assumption of cost-volume-profit analysis? The behavior of costs...

Question

Question

Which one of the following is not an assumption of cost-volume-profit analysis? The behavior of costs is linear throughout th

business accounting

Answer 1

Answer #1

Answer: Changes in activity and sales mix are the only factors that affects costs

Explanation:

i. The behavior of costs is linear throughout the relevant range - Assumption of CVP

ii. All Costs can be classified as either variable or fixed - Assumption of CVP

iii. Changes in activity are the only factors that affects costs - Assumption of CVP

iv. All units produced are sold - Assumption of CVP

Thus,

Changes in activity are the only factors that affects costs - Assumption of CVP

But, Sales mix factor does affects costs is not an assumption of CVP.

Therefore, Changes in activity and sales mix are the only factors that affects costs - Not an assumption of CVP analysis.

Answer 2

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