Which of the Following Assumptions Is Made When Doing a Cost

question 34

Multiple Choice

Which of the following assumptions is made when doing a cost volume profit analysis based on activity-based costing?

• A) Sales volume equals production volume.
• B) As production volume changes, the number of set-ups, inspections, material moves etc. does not change.
• C) The purchase price of raw materials per unit remains constant.
• D) Sales volume equals production volume AND the purchase price of raw materials per unit remains constant.

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Definitions:

FIFO Method

"First-In, First-Out," an inventory valuation method that assumes the first items placed into inventory are the first ones sold.

Current Period

The specific duration of time, typically the present month, quarter, or year, for which financial activities are being recorded and analyzed.

Process Cost Summary

A report that aggregates the costs associated with a process or a series of processes, showing material, labor, and overhead for a period.