Question

All of the following are assumptions of cost-volume-profit analysis except

A) Fixed costs
B) Variable costs
C) Constant selling price
D) Linear cost-volume-profit relationship

Answer 1

Cost-volume-profit (CVP) analysis involves making assumptions about fixed and variable costs, constant selling price, and a linear cost-volume-profit relationship. None of the options provided in the question are exceptions to these assumptions.

Step-by-step explanation:

Cost-volume-profit (CVP) analysis is a tool used by businesses to analyze the relationships between costs, volume, and profits.

It helps in decision-making related to pricing, production quantities, and breakeven points. However, all of the following are assumptions of CVP analysis:

1. Fixed costs: These are costs that do not change with the level of activity or volume.
2. Variable costs: These costs vary with the level of activity or volume.
3. Constant selling price: This assumption implies that the selling price per unit remains constant regardless of the volume of production or sales.
4. Linear cost-volume-profit relationship: This assumption suggests that costs and revenues change proportionately with changes in volume.

Therefore, the correct answer is: None of the above options is an exception to the assumptions of CVP analysis.