How Does the Cost-Volume-Profit Model Accommodate Non-Linear Costs and Revenues

question 80

Multiple Choice

How does the cost-volume-profit model accommodate non-linear costs and revenues?

• A) Non-linear costs and revenues are ignored by the model.
• B) Inventory levels are segregated into distinct ranges within which a linear relationship is expected to approximate the actual cost or revenue behavior.
• C) It is not a problem since non-linear costs and revenues do not exist in practice.
• D) None of these is correct.

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Definitions:

Contrast Effects

Previously interviewed job applicants affect an interviewer’s perception of a current applicant, leading to an exaggeration of differences between applicants.

Fundamental Attribution Error

This refers to the tendency to overemphasize personality-based explanations for behaviors observed in others while underestimating the influence of external factors.

Distinctiveness Cue

A feature or characteristic that makes an object, person, or group stand out from others.

Consensus Cue

A social influence where the agreement among multiple parties or sources enhances the perceived validity of information or decisions.