One of the biggest criticisms of cost volume profit (CVP) analysis is that it is merely a simplified model that needs to be used with a lot of caution.

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This statement is true. CVP analysis makes many simplifying assumptions, such as fixed costs and linear relationships between costs, volume, and profit. While it can be a useful tool for decision-making, it should not be used as the sole basis for important business decisions without careful consideration of its limitations and underlying assumptions.

One of the Biggest Criticisms of Cost Volume Profit (CVP)