Which of the Following Statements Regarding Cost-Volume-Profit Analysis Is Incorrect

question 6

Multiple Choice

Which of the following statements regarding cost-volume-profit analysis is incorrect?

• A) Cost-volume-profit analysis assumes that fixed cost per unit is constant.
• B) Cost-volume-profit analysis assumes that the selling price cost per unit is constant.
• C) An increase in inventory during a period will affect cost-volume-profit relationships.
• D) Although cost-volume-profit analysis is based on assumptions that seldom will be perfectly achieved, the technique is still useful to managers.

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Definitions:

Object Permanence

The understanding that objects continue to exist even when they cannot be seen, heard, touched, smelled, or sensed in any way.

Theory of Mind

The capacity to recognize and understand one's own and others' mental states, such as beliefs, intentions, desires, and emotions, realizing that others may have perspectives and thoughts distinct from our own.

Capacity for Abstract Reasoning

The capacity to contemplate concepts, principles, and entities that are not tangible or visible.

Negligent

Failing to take proper care in doing something, often resulting in damage or injury to others.