Question

Which of the following factors is involved in studying cost-volume-profit relationships?

a. product mix
b. variable costs
c. fixed costs
d. all of the above

Answer 1

In cost-volume-profit analysis, all factors including product mix, variable costs, and fixed costs are integral for understanding the relationship between production volumes, sales, and profits.

Step-by-step explanation:

The factors involved in studying cost-volume-profit relationships are product mix, variable costs, and fixed costs. Each of these plays a pivotal role in determining how costs change with varying levels of production and sales, which in turn affects profitability. Understanding the mix of products being sold (product mix) is crucial as each product may have different costs and profit margins. Variable costs change with production volume, such as raw materials and labor, while fixed costs remain constant regardless of the volume produced, like rent and salaries of permanent staff. Therefore, the correct answer is (d) all of the above.