In CVP Analysis, Managers Usually Assume That the Revenue Function

question 71

Multiple Choice

In CVP analysis, managers usually assume that the revenue function is linear. Which of the following equations best represents a linear revenue function if the cost is a variable cost?

• A) y = $200 + $60x
• B) y = $60x2
• C) y = $60x
• D) y = $200

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Definitions:

Horizontal Analysis

A financial analysis technique that compares line items in financial statements over a series of periods to identify trends and growth patterns.

Segment Data

This refers to the financial information that is reported separately for different divisions or segments of a company, providing insight into the performance of each segment.

Recent Years

A term referring to the latest or last few years, without a precise timeframe but generally considered to encompass the immediate past.

Cash Receipts Journal

An accounting ledger that tracks cash transactions coming into the business, documenting all cash sales and receivables.