Which of the Following Is Not an Assumption Used in CVP

question 30

Multiple Choice

Which of the following is not an assumption used in CVP analysis?

• A)Revenues increase proportionally with sales volume.
• B)A flexible product mix.
• C)Selling prices, unit variable costs, and fixed costs are known with certainty.
• D)Single-period analysis.
• E)All of the above are assumptions used in CVP analysis.

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Definitions:

Consumer Surplus

The gap between what consumers are prepared to pay for a product or service and what they end up spending.

Market Price

The current value at which a good or service is bought or sold in the market, typically influenced by the forces of supply and demand.

Maximum Price

A price ceiling, often set by regulatory bodies, above which a particular good or service cannot be sold, intended to protect consumers.

Consumer Surplus

The divergence between the price customers are willing to pay and the price they actually pay for a good or service.