Which of the Following Assumptions Might Negatively Affect the Validity

question 56

Multiple Choice

Which of the following assumptions might negatively affect the validity of a CVP analysis?

• A)Costs can be accurately separated into fixed and variable components.
• B)Fixed costs remain fixed, and variable costs per unit do not change over the activity levels of interest.
• C)Both the assumptions-costs can be accurately separated into fixed and variable components, and fixed costs remain fixed, and variable costs per unit do not change over the activity levels of interest-negatively affect the validity of a CVP analysis.
• D)None of these answer choices are correct.

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Definitions:

Cost Leader

A company that gains a competitive advantage by offering its products or services at a lower price than its competitors without sacrificing quality.

Support Activity

Activities within an organization that assist in providing value to customers but do not directly contribute to the primary product or service.

Inbound Logistics

Inbound Logistics refers to the transport, storage, and delivery of goods coming into a business, an essential component of supply chain management, focusing on receiving and handling materials and supplies.

Competitive Forces Model

A business framework devised by Michael Porter that analyzes competitiveness by recognizing five major forces that could endanger a company’s position.