Which of the Following Is $\textbf{ not }$

question 49

Multiple Choice

Which of the following is $\textbf{ not }$ an assumption about the data when using CVP analysis?

• A)All costs can be easily and accurately separated into fixed and variable components.
• B)Total fixed costs remain at a constant level and variable costs per
• C)More inventory is purchased than sold.
• D)A linear relationship exists between variable costs and sales activity over the relevant range of interest.

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Definitions:

Free-Rider Problem

The inability of potential providers of an economically desirable good or service to obtain payment from those who benefit, because of nonexcludability.

Highly Profitable

Describing a business or activity that generates a significantly higher amount of earnings compared to its costs.

Private Firm

A business owned by private individuals or entities, not traded publicly and not owned by the government.

Good

A tangible item or consumable entity that can satisfy a want, need, or desire, making it useful or enjoyable to consumers.