Which Question Can Cost-Volume-Profit Analysis Not Assist in Answering

question 19

Multiple Choice

Which question can cost-volume-profit analysis not assist in answering?

• A)Will the firm have sufficient funds to meet its commitments to creditors?
• B)If variable costs,such as labour,are replaced with fixed costs,such as machinery,what will be the impact on profits?
• C)What additional sales volume is required to offset an increase in purchase costs?
• D)What is the most profitable sales mix?

---

Definitions:

Capital Cost Allowance

A taxable expense in Canada that allows a business to deduct the cost of a capital asset over time.

Half-Year Rule

A tax rule in some jurisdictions that allows only half the usual depreciation expense deduction in the year that a capital asset is acquired.

Straight-Line

A method of calculating depreciation of an asset which assumes the asset depreciates equally over its useful life.

Tax Basis

The value of an asset for tax purposes, used to calculate capital gains or losses upon disposition of the asset.