Which of the Following Statements Relating to CVP Assumptions Is

question 13

Multiple Choice

Which of the following statements relating to CVP assumptions is not true?

• A)CVP analysis is not well suited for a setting in which available capacity is not sufficient to meet al demand.
• B)CVP analysis does not always provide the best solution to short term decisions.
• C)Fixed costs increase proportionately with sales volume.
• D)Selling prices and costs are known with certainty.
• E)All of the above statements are true.

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Definitions:

Option

A financial derivative that gives the buyer the right, but not the obligation, to buy or sell an asset at a specified price on or before a certain date.

Money

A medium of exchange, unit of account, and store of value that facilitates transactions and measures the value of goods and services.

Worthless

Describes an item that has no value, utility, or financial gain.

Exercise Price

The specified price on an option contract at which the option holder can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.