If production volume does not equal sales volume:
A)we must adjust the CVP formulas for that fact to use CVP.
B)we cannot use CVP,since an assumption is violated.
C)the CVP analysis will always indicate a breakeven point that cannot be reached.
D)the conclusions we draw from a CVP analysis will not be as sound as they would be if we assumed production equaled sales.

Question

Quizplus · Accepted Answer

The conclusions we draw from a CVP analysis will not be as sound as they would be if we assumed production equaled sales. The CVP analysis assumes that production and sales are equal, so if they are not equal in reality, the analysis may not be as accurate. However, it is still possible to use CVP analysis by making adjustments for the difference between production and sales volume.

If Production Volume Does Not Equal Sales Volume