Which of the Following Is Not an Assumption About the Data

question 107

Multiple Choice

Which of the following is 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 unit remain unchanged at all sales levels.
• 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:

Reorder Point

The inventory level at which a new order should be placed to replenish stock before it runs out, considering lead time.

Inventory Level

The quantity of goods or materials on hand at any given time, which is crucial for meeting demand without excessive holding costs.

Replenish

The process of filling or restocking products, supplies, or inventory to return to a desired level.

ABC Analysis

ABC Analysis is an inventory categorization technique that divides items into three categories (A, B, and C) based on their importance and value, with A being the most valuable.