All of the Following Are Assumed in a Cost-Volume-Profit Analysis

question 106

Multiple Choice

All of the following are assumed in a cost-volume-profit analysis EXCEPT:

• A)a constant product mix.
• B)fixed costs increase when activity increases.
• C)revenue per unit does not change as volume changes.
• D)all costs can be classified as either fixed or variable.

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Definitions:

Direct Labor

Work performed by employees who are directly involved in the production of goods or the provision of services.

Indirect Materials

Materials used in the production process but not directly traceable to the finished product, such as lubricants and adhesives.

Overapplied Overhead

A situation in which the allocated manufacturing overhead cost is greater than the actual overhead incurred.

Job-order Costing

An accounting method that assigns costs to specific jobs or batches, useful for customized orders or distinct products.