Which of the following is not an underlying assumption of CVP analysis?
A) Changes in activity are the only factors that affect costs.
B) Cost classifications are reasonably accurate.
C) Beginning inventory is larger than ending inventory.
D) Sales mix is constant.

Question

Quizplus · Accepted Answer

The assumption that beginning inventory is larger than ending inventory is not an underlying assumption of CVP analysis. The other three assumptions listed (changes in activity affect costs, accurate cost classifications, constant sales mix) are all key assumptions of CVP analysis.

Which of the Following Is Not an Underlying Assumption of CVP