Which of the Following Is True of Cost-Volume-Profit Analysis

question 149

Multiple Choice

Which of the following is true of cost-volume-profit analysis?

• A) The theory assumes that all costs are variable.
• B) The theory assumes that units manufactured equal units sold.
• C) The theory states that total variable costs remain the same over a relevant range.
• D) The theory states that total costs remain the same over the relevant range.

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Definitions:

Generate Cash

The process of creating liquidity or cash flows through activities such as operations, financing, or investments.

Organizational Performance

An analysis of a company's ability to achieve its goals and objectives, measured by factors such as profitability, productivity, and market share.

Variable Cost

costs that vary directly with the level of production or service delivery, such as raw materials and labor expenses.

Fixed Costs

Expenses that do not change in proportion to the activity level of a business, such as rent, salaries, and equipment leases.