Final answer:
A significant assumption in Multiple Product Cost Volume Profit analysis is that the sales mix remains constant, which simplifies multiple products into a single composite unit for analysis but might not reflect real-world complexities.
Step-by-step explanation:
The question asks about a big assumption in the Cost Volume Profit (CVP) analysis for multiple products. When a company sells more than one product, CVP analysis becomes complex. In single-product analysis, the focus is on how many units of a single product need to be sold to achieve a particular profit level or to cover a set amount of fixed costs. However, with multiple products, the assumption is that the sales mix of different products remains constant. The sales mix is the proportion in which each product contributes to total sales.
In reality though, the sales mix can change due to market conditions, competition, and customer preferences, which can significantly impact the company's revenue and profit levels. While this assumption simplifies the analysis by treating multiple products as a single composite unit, it might not accurately reflect the complexity of real-world operations, especially in variable market structures. Therefore, for long-run planning, firms must also consider the detailed aspects of market structure along with their cost and revenue analysis.