Which of the following is true of cost-volume-profit analysis?
A) The theory assumes that all costs are variable.
B) The theory assumes that units manufactured equal units sold.
C) The theory states that total variable costs remain the same over a relevant range.
D) The theory states that total costs remain the same over the relevant range.

Question

Quizplus · Accepted Answer

Cost-volume-profit (CVP) analysis assumes that the number of units produced is equal to the number of units sold, eliminating the complexities introduced by changes in inventory levels. This simplifies the analysis by focusing on production costs and sales revenue for the units sold.

Which of the Following Is True of Cost-Volume-Profit Analysis