Question

________ is an underlying assumption of cost-volume-profit analysis. A : All units produced are either sold or in ending inventory B : The behavior of both costs and revenues is curvilinear throughout the entire range of the activity index C : All costs can be classified as either variable or fixed with reasonable accuracy D : Changes in activity and other factors affect costs

Answer 1

C : All costs can be classified as either variable or fixed with reasonable accuracy

Step-by-step explanation:

Cost volume profit analysis (CVP) makes the following assumptions when it is used to determine how any change in costs can affect income:

• costs can be classified as fixed or variable, and they are constant
• revenues are linear with a given range
• all units produced are sold
• costs will only change if output changes