Which of the following is an underlying assumption of CVP analysis?
A)Factors other than changes in activity may affect costs.
B)Cost classifications are reasonably accurate.
C)Increases in inventories cause increase in total fixed costs.
D)Unit costs remain the same over the relevant range.

Question

Quizplus · Accepted Answer

CVP analysis assumes that cost classifications (fixed and variable) are reasonably accurate, allowing for predictions of how costs will behave with changes in activity levels.

Which of the Following Is an Underlying Assumption of CVP