Which of the following is true of CVP analysis?
A) Costs may be separated into separate inventoriable and period components with respect to the level of output.
B) Total revenues and total costs are linear in relation to output units.
C) Unit selling price, unit variable costs, and unit fixed costs are known and remain constant.
D) Proportion of different products will vary according to demand and supply when multiple products are sold.

Question

Quizplus · Accepted Answer

Total revenues and total costs are linear in relation to output units, meaning that they increase or decrease proportionally with the amount of units produced and sold. The other options are not necessarily true of CVP analysis. While costs can be separated into different categories, they do not necessarily have to be separated into inventoriable and period components. Unit selling price, unit variable costs, and unit fixed costs can fluctuate depending on various factors. The proportion of different products sold can also vary based on demand and supply.

Which of the Following Is True of CVP Analysis