Hampton Company, a producer of computer disks, has the following information:

-Which of the following is NOT an underlying assumption of the cost-volume-profit graph?
A) Expenses are categorized into variable and fixed.
B) Sales mix will not be constant.
C) Revenues and expenses are linear over the relevant range.
D) Efficiency and productivity will be unchanged.

Question

Hampton Company, a producer of computer disks, has the following information:
 
-Which of the following is NOT an underlying assumption of the cost-volume-profit graph?
A) Expenses are categorized into variable and fixed. 
B) Sales mix will not be constant. 
C) Revenues and expenses are linear over the relevant range. 
D) Efficiency and productivity will be unchanged.

Quizplus · Accepted Answer

The cost-volume-profit graph assumes that sales mix will remain constant. This means that the proportion of sales from each product or service will not change, and all products or services will maintain their current contribution margins. This assumption is necessary to accurately predict the break-even point and the level of sales required to achieve a certain profit.

Hampton Company, a Producer of Computer Disks, Has the Following