CVP analysis relies on the assumptions that costs are either strictly fixed or strictly variable.Consistent with these assumptions,as volume decreases total
A)fixed costs decrease.
B)variable costs remain constant.
C)costs decrease.
D)costs remain constant.

Question

Quizplus · Accepted Answer

CVP analysis assumes that fixed costs remain constant regardless of the volume of goods or services produced, while variable costs change in direct proportion to the volume of output. Therefore, as volume decreases, total costs decrease because variable costs decrease, while fixed costs remain constant.

CVP Analysis Relies on the Assumptions That Costs Are Either