Which of the following assumptions is NOT necessary for cost-volume-profit analysis?
A)Total variable costs are linear.
B)Total revenues increase when total costs increase.
C)Inventories are constant.
D)The product sales mix is constant.

Question

Quizplus · Accepted Answer

Cost-volume-profit (CVP) analysis does not assume that total revenues increase when total costs increase. This assumption is not necessary because CVP focuses on how revenues, costs, and profits change with changes in volume, not necessarily with changes in costs.

Which of the Following Assumptions Is NOT Necessary for Cost-Volume-Profit