Which of the following is not a valid assumption for cost-volume-profit analysis?
A)Variable costs per unit are not affected by changes in the rate of production.
B)An increase in fixed costs will cause the break-even point to rise.
C)Demand is constant regardless of price.
D)A decrease in variable cost per unit will lower the break-even point.

Question

Quizplus · Accepted Answer

Demand is not constant regardless of price. It will decrease as the price increases and vice versa, which is an important assumption for cost-volume-profit analysis. A, B, and D are valid assumptions for cost-volume-profit analysis.

Which of the Following Is Not a Valid Assumption for Cost-Volume-Profit