Cost-volume-profit relationships that are curvilinear may be analyzed linearly by considering only
A)fixed and mixed costs.
B)relevant fixed costs.
C)relevant variable costs.
D)a relevant range of volume.

Question

Quizplus · Accepted Answer

Curvilinear cost-volume-profit relationships can be analyzed linearly by considering a relevant range of volume. This means that the analysis should only take into account the level of activity where the cost and revenue relationships are relatively constant. By considering only a relevant range of volume, the cost and revenue relationships can be approximated as linear even if they are actually curvilinear. Therefore, choice D is the best answer. Choices A, B, and C are not inclusive enough to fully address the issue of curvilinear cost-volume-profit relationships.

Cost-Volume-Profit Relationships That Are Curvilinear May Be Analyzed Linearly by Considering