Question

What assumption is NOT relied upon in Cost-Volume-Profit (CVP) analysis?

A) Constant variable costs per unit
B) Fixed costs remain constant
C) Selling price per unit remains constant
D) Total costs are linear

Answer 1

In CVP analysis, the assumption that is NOT relied upon is that the selling price per unit remains constant. The other assumptions in CVP analysis include constant variable costs per unit, fixed costs remain constant, and total costs are linear.

Step-by-step explanation:

In Cost-Volume-Profit (CVP) analysis, the assumption that is NOT relied upon is option C) Selling price per unit remains constant. CVP analysis assumes that the selling price per unit can change, which means that the assumption is not that the selling price per unit remains constant. The other assumptions in CVP analysis include constant variable costs per unit (option A), fixed costs remain constant (option B), and total costs are linear (option D).