Cost-Volume-Profit Analysis Is Based on Three Basic Assumptions

question 39

Multiple Choice

Cost-volume-profit analysis is based on three basic assumptions.Which of the following is not one of these assumptions?

• A) Total fixed costs remain constant over changes in volume.
• B) Curvilinear costs change proportionately with changes in volume throughout the relevant range.
• C) Variable costs per unit of output remain constant as volume changes.
• D) Sales price per unit remains constant as volume changes.
• E) The relationship between volume, costs, and profits do not necessarily hold outside the relevant range.

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Definitions:

Business Activity

The various actions undertaken by individuals or entities engaging in commercial, industrial, or professional operations.