Cost-volume-profit analysis is a technique available to management to understand better the interrelationships of several factors that affect a firm's profit.As with many such techniques,the accountant oversimplifies the real world by making assumptions.Which of the following is not a major assumption underlying CVP analysis?
A)All costs incurred by a firm can be separated into their fixed and variable components.
B)The product selling price per unit is constant at all volume levels.
C)Operating efficiency and employee productivity are constant at all volume levels.
D)For multi-product situations,the sales mix can vary at all volume levels.

Question

Quizplus · Accepted Answer

The major assumption underlying CVP analysis for multi-product companies is that the sales mix remains constant at all volume levels, not that it can vary.

Cost-Volume-Profit Analysis Is a Technique Available to Management to Understand