The cost-volume-profit analysis includes all of the following assumptions except?

The cost-volume-profit analysis includes all of the following assumptions except?

A. The behavior of costs is curvilinear throughout the relevant range.

B. All costs can be classified as either variable or fixed.

C. Changes in activity are the only factors that affect costs.

D. All units produced are sold.

Answer: A. The behavior of costs is curvilinear throughout the relevant range.

CVP analysis simply means cost-volume-profit analysis and is one of the most popular techniques in managerial accounting, and this analysis has been found to have the following assumptions. Another important assumption, which is common with the other models, is that costs are considered to be linear within the relevant range; this is in the sense that variable costs increase or decrease in an equal proportion to activity level while fixed costs do not change. The assumption of linearity assists in making the procedures and examinations made in CVP analysis reasonably simple.

The other assumptions of CVP analysis include:

B. It is possible to categorise all costs as either fixed or variable in nature.

C. Activity changes, are the only cause for cost variation.

D. All units produced are sold They can be sold as products in the market Automakers 4.

These assumptions are useful in developing a simplified number of cost-volume profit relationships which are useful in making managerial decisions concerning those modifications.