One of the Assumptions of CVP Analysis Assumes Production and Sales

question 22

True/False

One of the assumptions of CVP analysis assumes production and sales to be approximately equal.

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Definitions:

Average-Variable-Cost Curve

A graphical representation showing how average variable costs of production vary with the level of output, typically U-shaped due to economies and diseconomies of scale.

Average Total Cost

The total cost of production (fixed and variable costs combined) divided by the number of units produced, indicating the average cost of producing each unit.

Marginal-Cost Curve

A curve that shows the cost of producing one additional unit of a good or service.

Average-Total-Cost Curve

A graphical representation that shows the average total cost per unit of output at various levels of production.