Which of the Following Is an Assumption of CVP Analysis

question 116

Multiple Choice

Which of the following is an assumption of CVP analysis?

• A) Total costs can be divided into a fixed component and a component that is variable with respect to the level of output.
• B) When graphed, total costs curve upward.
• C) The unit-selling price is variable as it is subject to demand and supply.
• D) Total costs can be divided into inventoriable and period costs with respect to the level of output.

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Definitions:

Certain Income

Income that is guaranteed or known, without any risk of fluctuation or loss.

Uncertain Income

Income that is not guaranteed and can vary significantly from period to period, often depending on factors like market demand or job security.

Marginal Utility

The bonus utility or pleasure experienced by someone when consuming another unit of a given good or service.

Risk-averse

A description of an individual's or entity's preference for avoiding loss over making a gain.