Hampton Company, a producer of computer disks, has the following information:

-The limiting assumptions of CVP analysis include all of the following EXCEPT
A) a nonlinear revenue function and a nonlinear cost function.
B) that the inventory levels at the beginning of the period are close to the inventory levels at the end of a period.
C) selling prices and costs are known with certainty.
D) costs can be separated into fixed and variable components.

Question

Hampton Company, a producer of computer disks, has the following information:
 
-The limiting assumptions of CVP analysis include all of the following EXCEPT
A) a nonlinear revenue function and a nonlinear cost function. 
B) that the inventory levels at the beginning of the period are close to the inventory levels at the end of a period. 
C) selling prices and costs are known with certainty. 
D) costs can be separated into fixed and variable components.

Quizplus · Accepted Answer

CVP analysis assumes linear revenue and cost functions, not nonlinear ones.

Hampton Company, a Producer of Computer Disks, Has the Following