When the assumption of linearity is applied to revenue in CVP analysis:
A) Fixed cost per unit increases as revenue decreases
B) Variable cost per unit is linear with respect to total revenue
C) The sales mix and all of the prices remain constant
D) The sales mix remains constant, but prices decrease as volumes increase

Question

Quizplus · Accepted Answer

When the assumption of linearity is applied to revenue in CVP analysis, it assumes that the sales mix and all of the prices remain constant. This means that the relationship between revenue and volume is linear, and any increase or decrease in revenue is directly proportional to the change in volume. Therefore, option C is the best choice.

When the Assumption of Linearity Is Applied to Revenue in CVP