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:

Dividends

Payments made to shareholders out of a corporation's earnings.

Shareholders

Owners of shares in a corporation, holding a portion of the company's stock and thus a claim on its assets and earnings.

Income Taxes Payable

This represents the amount of income taxes a company owes to the government that has not yet been paid.

Income Tax Expense

Income tax expense represents the amount of money a company expects to pay in taxes based on its taxable income for the current fiscal year.