An Assumption of CVP Analysis Is That All Costs Can

question 145

True/False

An assumption of CVP analysis is that all costs can be classified as either variable or fixed.

Understand the concept of net present value (NPV) and its calculation under different scenarios.

Identify the factors affecting operating cash flow (OCF) and calculate OCF under various scenarios.

Analyze the impact of depreciation on cost analysis and cash flows.

Understand and apply the concept of marginal cost in decision-making.

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Definitions:

Machine-Hours

A unit of measure representing the operational use time of a machine, commonly used in allocating manufacturing overhead costs in product costing.

Manufacturing Overhead

All indirect costs associated with the production process, including costs of indirect materials, indirect labor, and other indirect expenses.

Direct Labor-Hours

The cumulative hours employees dedicate to directly participating in the creation of a product or the provision of a service.

Overhead Rate

The ratio used to allocate overhead costs to products or services, often based on direct labor hours or costs.