Cost-Volume-Profit Analysis Is Based on Certain General Assumptions

question 52

True/False

Cost-volume-profit analysis is based on certain general assumptions. One of these assumptions is that product prices will remain constant as volume varies within the relevant range.

---

Definitions:

Financial Statements

Compiled reports that provide an overview of a business’s financial condition, including income statement, balance sheet, and cash flow statement.

Return on Total Assets

A profitability ratio that measures the net income produced by total assets during a period by comparing net income to the average total assets.

Performance

Refers to the act of carrying out or accomplishing an action, task, or function.

Profit Margin

A financial metric that calculates the percentage of profit derived from revenue after all expenses are subtracted.