Which of the following is not an assumption of CVP analysis?
A) The selling price per unit is constant.
B) Total variable costs vary in proportion with changes in activity levels.
C) The sales mix varies in proportion with changes in activity levels.
D) Employee productivity is constant across all activity levels.

Question

Quizplus · Accepted Answer

CVP (Cost-Volume-Profit) analysis assumes that the sales mix remains constant as activity levels change, not that it varies. Choices A, B, and D are typical assumptions of CVP analysis, where selling prices and variable costs are considered constant per unit, and efficiency or productivity levels are assumed not to change with different activity levels.

Which of the Following Is Not an Assumption of CVP