Question

Which of the following are assumptions of cost volume profit analysis?

Answer 1

The assumptions of cost volume profit analysis include fixed costs do not change with changes in activity level, variable costs remain constant per unit, selling prices remain constant, the mix of products sold remains constant, and behaviors within the relevant range.

Step-by-step explanation:

Assumptions of cost volume profit analysis include:

1. Fixed costs do not change with changes in activity level: This assumption states that fixed costs do not vary regardless of how many units are produced or sold.
2. Variable costs remain constant per unit: This assumption assumes that variable costs remain consistent for each unit produced or sold.
3. Selling prices remain constant: This assumption assumes that the price at which products or services are sold does not change.
4. The mix of products sold remains constant: This assumption states that the proportion of different products sold remains the same.
5. Behaviors within the relevant range: This assumption assumes that cost and revenue behaviors follow predictable patterns within a certain range of production or sales volume.