Cost-volume-profit analysis includes all of the following assumptions except
A) the behavior of costs is curvilinear throughout the relevant range.
B) costs can be classified accurately as either variable or fixed.
C) changes in activity are the only factors that affect costs.
D) all units produced are sold.

Question

Quizplus · Accepted Answer

Cost-volume-profit analysis assumes that the behavior of costs is linear throughout the relevant range, not curvilinear. This assumption allows for the calculation of a constant unit variable cost and a constant total fixed cost, which simplifies the analysis.

Cost-Volume-Profit Analysis Includes All of the Following Assumptions Except