Using the assumptions of CVP analysis, if a company thought its sales may increase by 50% in the upcoming year over last year, the variable costs in total will change by a similar percentage.

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Quizplus · Accepted Answer

This assumption is consistent with the basic principles of CVP analysis, as variable costs are directly proportional to changes in sales volume. Therefore, if sales increase by 50%, variable costs in total should also increase by a similar percentage.

Using the Assumptions of CVP Analysis, If a Company Thought