Which of the Following Assumptions Does NOT Pertain to Cost-Profit-Volume

question 2

Multiple Choice

Which of the following assumptions does NOT pertain to cost-profit-volume analysis?

• A)Sales price per unit remains constant.
• B)The sales mix is constant.
• C)Inventories in a manufacturing entity may go up or down.
• D)Fixed expenses are constant at all volumes of activities within the relevant range.

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Definitions:

Market Price

The prevailing rate at which a service or asset is offered for sale or purchase in a market.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.

Net Income

The net earnings of a company once all costs and taxes are subtracted from the total income.

Stockholders' Equity

Stockholders' equity represents the owners' claim after subtracting total liabilities from total assets, indicating the net worth of a company from the shareholders' perspective.