Cost Volume Profit (CVP) Analysis Is Based on a Number

question 111

Multiple Choice

Cost volume profit (CVP) analysis is based on a number of limiting assumptions. Which of the following is not one of the assumptions of the CVP model?

• A) Production units equal sales units over the period.
• B) If the firm has a product mix, the mix remains constant.
• C) Cost behaviour is linear over the relevant range.
• D) CVP analysis only applies to a single-product firm.

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Definitions:

Manufacturing Process

Involves the steps through which raw materials are transformed into a final product, applying various techniques and methods.

Income Statement

A financial report that shows the company's revenues, expenses, and profits or losses over a specific period of time.

Inventory Inspection Costs

Expenses associated with the verification and checking of goods in inventory for quality and quantity control.