Which One of the Following Is Not an Assumption of CVP

question 93

Multiple Choice

Which one of the following is not an assumption of CVP analysis?

• A) All units produced are sold.
• B) All costs are variable costs.
• C) Sales mix remains constant.
• D) The behavior of costs and revenues are linear within the relevant range.

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Definitions:

Premium on Stock

The amount by which the price paid for a stock exceeds its par (or nominal) value, representing additional capital paid in by investors.

Treasury Stock

Stocks that the issuing entity initially sold and then bought back, decreasing the total number of stocks available in the market.

Contra Equity

An equity account that reduces the total amount of equity, such as treasury stock or drawings account.

Asset Account

An asset account is a ledger account that tracks the value of assets owned by an individual or organization, including tangible and intangible items of value.