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:

Canadian Tire

A Canadian retail company that sells a wide range of automotive, hardware, sports and leisure, and home products.

Contract Labour

Workers employed on a contractual basis rather than as permanent employees, often for a specific project or time period.

Core Knowledge Workers

Employees who possess essential expertise and skills critical to the functioning and competitiveness of an organization.

Strategic Value

The worth or importance of something in achieving a business's long-term objectives and sustaining its competitive advantage.