Which of the following items is NOT an assumption of CVP analysis?
A)Proportions of different products will remain constant when multiple products are sold.
B)Total revenues and total costs are linear in relation to output units.
C)Unit selling price and unit fixed costs are known and remain constant.
D)Costs may be separated into separate fixed and variable components.

Question

Quizplus · Accepted Answer

CVP (Cost-Volume-Profit) analysis assumes that unit selling price, variable costs per unit, and total fixed costs are known and remain constant. It does not assume that unit fixed costs are constant, as fixed costs are total costs that do not change with the level of output.

Which of the Following Items Is NOT an Assumption of CVP