Cost-volume-profit analysis assumes that all costs can be accurately described as either fixed or variable.Cost-volume-profit analysis assumes that costs can be classified or broken down as fixed or variable.

Question

Quizplus · Accepted Answer

Cost-volume-profit analysis is based on the assumption that costs can be classified into fixed and variable components. Fixed costs remain constant regardless of changes in production levels, while variable costs vary in proportion to changes in volume of production. By analyzing the relationship between revenues, costs, and production volume, cost-volume-profit analysis can help businesses make informed decisions about pricing, product mix, and production levels.

Cost-Volume-Profit Analysis Assumes That All Costs Can Be Accurately Described