Which of the following is an assumption of CVP analysis?
A)Costs must be separated into separate fixed and variable components.
B)Total revenues and total costs are curvilinear in relation to output units.
C)Given revenue mixed of products is dynamic.
D)There will be a change between beginning and ending levels of inventory.
E)The time value of money must be taken into account.

Question

Quizplus · Accepted Answer

CVP analysis assumes that costs can be separated into fixed and variable components. This allows for the calculation of a contribution margin, which is necessary for determining the breakeven point and making other important decisions. The other options are not assumptions of CVP analysis.

Which of the Following Is an Assumption of CVP Analysis