Which of the following is the major assumption as to cost and revenue behavior underlying conventional cost-volume-profit calculations?
A)variability of fixed costs.
B)variability of unit prices and efficiency.
C)curvilinearity of relationships.
D)linearity of relationships.

Question

Quizplus · Accepted Answer

The major assumption underlying conventional cost-volume-profit calculations is the linearity of relationships between costs, revenues, and activity levels. This means that costs and revenues are assumed to change proportionally with changes in activity levels within a relevant range.

Which of the Following Is the Major Assumption as to Cost