Cost-volume-profit analysis is based on necessary assumptions. Which of the following is not one of these assumptions?
A) Total fixed costs are held constant.
B) Costs can be classified as variable or fixed.
C) Relevant range includes all possible levels of activity that a company might experience.
D) A constant sales mix in a multiproduct company.
E) Sales price and variable costs per unit of output remain constant as volume changes.

Question

Quizplus · Accepted Answer

The relevant range does not include all possible levels of activity; it includes only the range of activity within which the assumptions about fixed and variable costs are valid.

Cost-Volume-Profit Analysis Is Based on Necessary Assumptions