Which of the Following Is an Underlying Assumption of CVP

question 81

Multiple Choice

Which of the following is an underlying assumption of CVP analysis?

• A)Factors other than changes in activity may affect costs.
• B)Cost classifications are reasonably accurate.
• C)Increases in inventories cause increase in total fixed costs.
• D)Unit costs remain the same over the relevant range.

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Definitions:

Two-tailed Test

A statistical hypothesis test in which the area of interest is in both tails of the probability distribution, considering both directions of an effect.

Level Of Significance

The threshold used to determine the statistical significance of an observed effect; denoted by alpha, typically set at 0.05 or 5%.

P-value

The chance of obtaining test outcomes that are as drastic as, or more drastic than, the ones actually observed, under the premise that the null hypothesis is right.