In CVP analysis the term "cost"
A) includes only manufacturing costs.
B) means cost of goods sold.
C) includes manufacturing costs plus selling and administrative expenses.
D) excludes all fixed manufacturing costs.

Question

Quizplus · Accepted Answer

In CVP analysis, the term "cost" includes not only manufacturing costs but also selling and administrative expenses, which are important in determining the overall profitability of a product or service. This is because CVP analysis takes into account all costs that are directly or indirectly associated with producing and selling a product, including fixed and variable costs. Therefore, option A is incorrect because it excludes selling and administrative expenses, while option B is incorrect because it only refers to the cost of goods sold. Finally, option D is incorrect because fixed manufacturing costs are included in the cost analysis in CVP analysis.

In CVP Analysis the Term "Cost