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:

Convex Preferences

A preference structure where the consumer prefers mixed bundles of goods to extreme bundles, represented graphically by a bowed-inward indifference curve.

Monotonic Preferences

A preference pattern where more of a good is always preferred to less, maintaining a consistent order.

Utility Function

A mathematical representation of how different combinations of goods or services lead to different levels of happiness or satisfaction for an individual.

Income

Earnings from work or investments, often measured in terms of money received over a period of time.