CVP Analysis with Multiple Products Assumes That Sales Will Continue

question 67

Multiple Choice

CVP analysis with multiple products assumes that sales will continue at the same mix of products, expressed in either sales units or sales dollars. This assumption is essential, because a change in the product mix will probably change:

• A) The average sales price per unit.
• B) The average variable cost per unit.
• C) The weighted-average contribution margin (per unit or ratio).
• D) The total fixed cost.
• E) The average contribution margin (per unit or ratio).

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Definitions:

Interest Expense

The financial burden placed on a company due to borrowing funds over a time span.

Income Tax Expense

The cost associated with the taxes levied on the income of a company by the government.

Income From Operations

Income from a company’s principal operating activity; determined by subtracting cost of goods sold and operating expenses from net sales.

Trend Percentage

A comparative analysis technique that calculates the change in financial data over multiple periods to identify patterns or trends.