In multiproduct cost-volume-profit analysis,an assumption made in addition to those used in single-product CVP analysis is that:
A)the sales mix remains constant.
B)all costs can be classified as fixed or variable.
C)costs are linear in the relevant range.
D)production and sales are equal.

Question

Quizplus · Accepted Answer

The assumption that the sales mix remains constant is necessary in multiproduct CVP analysis because different products have different contribution margins and therefore affect the overall break-even point and target profit. If the sales mix changes, it will also change the overall contribution margin ratio and break-even point, making the analysis more complex. The other assumptions (B, C, and D) are also relevant in both single and multiproduct CVP analysis.

In Multiproduct Cost-Volume-Profit Analysis,an Assumption Made in Addition to Those