CVP Analysis Is Based on a Number of Assumptions, Which

question 10

Multiple Choice

CVP analysis is based on a number of assumptions, which of these is not one of those assumptions?

• A) Fixed costs remain constant over the relevant range
• B) Variable costs change proportionately with volume
• C) Efficiency remains relatively unchanged
• D) There are no mixed costs

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Definitions:

Cash Flows

The total amount of money being transferred into and out of a business, especially affecting liquidity.

Subsidiary

A company that is completely or partly owned and partly or entirely controlled by another company, which is referred to as the parent company.

Upstream

In an industry context, refers to the exploration and production stages in oil and gas, or more generally, to processes or activities that occur at the beginning of a supply chain.

Consolidated Amount

The total sum resulting from the combination of various items, expenses, revenues, or financial statements.