Which of the following is NOT an underlying assumption of cost-volume-profit analysis?
A) We can classify expenses into fixed and variable categories.
B) In multiproduct companies, sales mix will be constant.
C) Revenues and expenses are linear over the relevant range.
D) The inventory level changes significantly during the period.

Question

Quizplus · Accepted Answer

Cost-volume-profit analysis assumes that inventory levels remain constant during the relevant period. Therefore, option D is NOT an underlying assumption of the analysis. A, B, and C are all assumptions of cost-volume-profit analysis.

Which of the Following Is NOT an Underlying Assumption of Cost-Volume-Profit