Which of the Following Is Not a Key Assumption Using

question 75

Multiple Choice

Which of the following is not a key assumption using CVP analysis?

• A)Capacity is available with no limitations on the supply of raw materials.
• B)Selling prices, unit variable costs, and fixed costs are known with certainty.
• C)Variable costs and revenue increase proportionately with sales volume.
• D)CVP will always provide the best answer for short-term decisions.

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Definitions:

Ordinary Perpetuity

A type of annuity that pays a fixed amount to an investor at regular intervals indefinitely.

Compounded Annually

An interest calculation method where interest is added to the principal once a year, affecting the calculation of future interest.

Compounded Monthly

An interest calculation method where interest is added to the principal balance monthly, causing the total amount of interest to grow at an increasing rate.

Compounded Annually

The method of calculating interest where the total interest is added to the principal once per year, resulting in interest earning interest annually.