A limiting assumption in CVP analysis is that:
A) The behaviour of both revenues and costs is linear throughout the entire relevant range
B) Inventories change in breakeven computations
C) The sales mix is not constant
D) Efficiency in operations is not constant

Question

Quizplus · Accepted Answer

CVP analysis assumes that both revenues and costs behave linearly throughout the entire relevant range, which means that the total revenue and total cost will change proportionately to changes in volume within the range. Other assumptions may include a constant sales mix, fixed prices and costs, and no variation in inventory levels.

A Limiting Assumption in CVP Analysis Is That