CVP analysis assumes that the selling price per unit does not change as volume changes.

Question

Quizplus · Accepted Answer

CVP analysis assumes that the selling price per unit remains constant regardless of changes in volume, making it a very simplified model. In reality, selling prices may change due to factors like competition, changes in production costs, or changes in customer demand. However, CVP analysis can still be a useful tool for providing insights into the relationship between costs, sales volume, and profits.

CVP Analysis Assumes That the Selling Price Per Unit Does