Which of the Following Is the Major Assumption as to Cost

question 120

Multiple Choice

Which of the following is the major assumption as to cost and revenue behavior underlying conventional cost-volume-profit calculations?

• A)variability of fixed costs.
• B)variability of unit prices and efficiency.
• C)curvilinearity of relationships.
• D)linearity of relationships.

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Definitions:

Purchases

Merchandise for resale. It is a cost.

Departmental Gross Profit

The profit made by individual departments within a company, calculated by subtracting the cost of goods sold from the sales revenue generated by each department.

Revenue

Income generated from normal business operations and includes discounts and deductions for returned merchandise.

Profit Center

A segment or part of a business directly responsible for its profits and losses.