An Assumption Needed for CVP Analysis in Multiple-Product Companies Is

question 43

True/False

An assumption needed for CVP analysis in multiple-product companies is that the sales mix remains constant.

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Definitions:

Diminishing Returns Effect

A principle in economics where increasing one factor of production, while keeping others constant, will at some point yield lower per-unit returns.

Variable Cost

Expenses that vary directly with the level of production output, such as raw materials, labor, and energy costs.

Output

The total amount of goods or services produced by a company, sector, or economy within a specific time period.

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the number of units produced.