Which of These Is Not an Assumption of Cost-Volume-Profit Analysis

question 28

Multiple Choice

Which of these is not an assumption of cost-volume-profit analysis?

• A) The behaviour of income and expenses is regarded as linear over the relevant range.
• B) Costs can be classified into variable and fixed categories.
• C) The time value of money is incorporated into the analysis.
• D) The sales mix will remain constant.

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Definitions:

Perpetual Inventory System

A method of inventory management where adjustments to inventory accounts are made continuously as transactions occur.

Cost Of Goods Sold

An accounting term referring to the direct costs attributable to the production of the goods sold by a company.

Ending Inventory

The total value of goods available for sale at the end of an accounting period, becoming the next period's beginning inventory.

Periodic Inventory System

An inventory accounting system where updates to inventory levels are made at specific intervals, such as monthly or annually, rather than continuously.