which of the following is true about the assumptions underlying basic cvp analysis? course hero

Why do you use CVP analysis?

Which of the following is true about the assumptions underlying basic CVP analysis? a. Only selling price is known and constant. b. Only selling price and variable cost per unit are known and constant. c. Only selling price, variable cost per unit, and total fixed costs are known and constant. d.

What does ni mean in CVP analysis?

Aug 23, 2018 · 9) Which of the following is true about the assumptions underlying basic CVP analysis? A) Only selling price is known and constant. B) Only selling price and variable cost per unit are known and constant. C) Only selling price, variable cost per unit, and total fixed costs are known and constant. D) Selling price, variable cost per unit, fixed ...

Where does the breakeven point start in the graph method of CVP?

1) Which of the following is true about the assumptions underlying basic CVP analysis? A) Only selling price is known and constant. B) Only selling price and variable cost per unit are known and constant. C) Only selling price, variable cost per unit, and …

Which of the following is true about the assumption underlying basic CVP analysis?

Which is true of the following is true about the assumption underlying basic CVP analysis? Only selling price, variable cost per unit, and total fixed costs are known and constant.

What are the assumptions underlying CVP analysis?

The assumptions underlying CVP analysis are: The behavior of both costs and revenues are linear throughout the relevant range of activity. (This assumption precludes the concept of volume discounts on either purchased materials or sales.) Costs can be classified accurately as either fixed or variable.

Why are assumptions important in CVP analysis?

The reliability of CVP lies in the assumptions it makes, including that the sales price and the fixed and variable cost per unit are constant. The costs are fixed within a specified production level. All units produced are assumed to be sold, and all fixed costs must be stable.

What are the assumptions and limitations of CVP analysis?

The limitations of cvp analysis are its assumptions. This means that it is assumed that the selling price per unit remains constant, variable costs vary in direct proportion to changes in activity, the projections cover only a short period, and the sales mix will remain constant if more than one product is sold.Sep 17, 2021

What are the basic assumptions of CVP analysis How can managers use CVP analysis as part of their budgeting and planning process?

Assumptions when using CVP analysis All costs, including manufacturing, administrative, and overhead costs, can be accurately identified as either fixed or variable. The selling price per unit is constant. Changes in activity are the only factors that affect costs. All units produced are sold.Nov 25, 2016

What are the 3 elements of CVP analysis?

The three main elements are cost, sales volume and price. A CVP analysis looks at how these elements influence profit.Apr 6, 2021

How CVP analysis is useful for the management?

The CVP analysis is aimed at determining the output that adds value to the business, emphasizes the impact of fixed costs, break-even points, target profits that determine sales volume and revenue estimates. Making price decisions and price structures is simpler when using the CVP analysis.

What are the main limitations of CVP analysis?

Limitations of CVP Fixed costs not always fixed. Proportionate relation between variable cost and volume of output not always effective. Unit selling price not always constant. Not suitable for a multiproduct firm.

Which of the following is not a method used for basic CVP analysis?

Which of the following is NOT a method used for basic CVP analysis? c) break even analysis. Because this is a form of CVP, NOT a method.

What do you understand by CVP analysis explain the advantages and limitations of CVP analysis?

CVP analysis allows the manager to plug in variable costs to establish an idea of future performance, within a range of possibilities. This, however, can be a disadvantage to managers who are not detail-oriented and precise with the data they record.