In CVP analysis,linear functions are assumed for
A)contribution margin per unit.
B)fixed cost per unit.
C)total costs per unit.
D)all of the above.

Question

Quizplus · Accepted Answer

In CVP (Cost-Volume-Profit) analysis, it is assumed that the contribution margin per unit remains constant, which implies a linear relationship between sales and variable costs. Fixed costs are also assumed to be constant in total, but not per unit, as the per-unit fixed cost changes with the level of production or sales volume. Total costs per unit do not have a linear function because they include both variable costs, which change with the level of activity, and fixed costs, which remain constant in total but vary per unit with changes in activity level.

In CVP Analysis,linear Functions Are Assumed for