Which of the following is true about the assumptions underlying basic CVP analysis?
A) Selling price varies with demand and supply of the product.
B) Only selling price and variable cost per unit are known and constant.
C) Only selling price, variable cost per unit, and total fixed costs are known and constant.
D) Selling price, variable cost per unit, fixed cost per unit, and total fixed costs are known and constant.

Question

Quizplus · Accepted Answer

Basic CVP analysis assumes that only selling price, variable cost per unit, and total fixed costs are known and constant. The assumption is made to simplify the analysis and provide a starting point for decision-making. However, in reality, selling price and variable cost per unit can vary based on changes in demand and supply of the product. Nonetheless, these assumptions are still useful for making short-term decisions.

Which of the Following Is True About the Assumptions Underlying