Which of the following is not an assumption of cost-volume-profit analysis?
A)The variable cost per unit varies over the relevant range of activity.
B)The sales mix is unchanged over the relevant range of activity.
C)The total fixed cost is constant over the relevant range of activity.
D)The total variable cost changes in direct proportion to changes in the level of activity over the relevant range of activity.

Question

Quizplus · Accepted Answer

Cost-volume-profit (CVP) analysis assumes that the variable cost per unit is constant over the relevant range of activity, not varying as option A suggests. Options B, C, and D correctly state assumptions of CVP analysis: sales mix remains constant, total fixed costs are constant, and total variable costs change in direct proportion to activity level changes, respectively.

Which of the Following Is Not an Assumption of Cost-Volume-Profit