Which of the Following Items Is NOT an Assumption of CVP

question 181

Multiple Choice

Which of the following items is NOT an assumption of CVP analysis?

• A)Proportions of different products will remain constant when multiple products are sold.
• B)Total revenues and total costs are linear in relation to output units.
• C)Unit selling price and unit fixed costs are known and remain constant.
• D)Costs may be separated into separate fixed and variable components.

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Definitions:

Short Interest

The aggregate amount of a specific stock's shares that investors have short sold and are yet to close or cover.

Diminishing Marginal Utility

A principle stating that as a person increases consumption of a product, there is a decline in the additional satisfaction a person gains from consuming one more unit.

Prospect Theory Loss Aversion

A concept from behavioral economics indicating that people feel the pain of losing money more acutely than they feel the pleasure of gaining the same amount.

TRIN Ratio

Also known as the Arms Index, this technical analysis indicator compares the number of advancing and declining stocks to the volume of advancing and declining stocks, used to gauge overall market sentiment.