Which of the Following Are Underlying Assumptions of Cost-Volume-Profit Analysis

question 41

Multiple Choice

Which of the following are underlying assumptions of cost-volume-profit analysis?

• A)Fixed costs will not change over a wide range of activity and variable costs are strictly variable.
• B)All costs can be classified either as a fixed or variable cost and behave linearly.
• C)Sales prices do not change in the relevant range and the sales mix must remain constant.
• D)All of the answers are correct.

---

Definitions:

GDP

The total worth of goods and services generated inside the confines of a country during a set period, known as Gross Domestic Product, acts as a wide-ranging gauge of the country's economic health.

Consumption

Consumption refers to the use of goods and services by households. It is a primary component of economic activity, measuring the total value of all goods and services consumed over a specific time period.

Disposable Income

The total amount of money available to an individual or household for spending and saving after income taxes have been deducted.

Disposable Income

The income left over for personal spending after direct taxes have been subtracted from an individual’s gross income.