Which of the following assumptions is false in a cost-volume-profit analysis? Total sales and total costs can be represented by straight lines. Within the relevant range of operating activity, the efficiency of operations does not change. Costs can be divided into fixed and variable components. There are changes in the inventory quantities during the period.

Question

Business

Ireland Berry

22 June, 04:10

Which of the following assumptions is false in a cost-volume-profit analysis? Total sales and total costs can be represented by straight lines. Within the relevant range of operating activity, the efficiency of operations does not change. Costs can be divided into fixed and variable components. There are changes in the inventory quantities during the period.

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Answers (1)

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Carlee Haynes · Answer 1

Correct answer: " There are changes in the inventory quantities during the period".

Explanation:

Cost - Volume profit analysis refers to a method, which focuses on determining the impact of the various levels of cost and the volume on the operating profit of the business.

It is also known as break-even analysis which is used by the managers to make short-term decisions. It includes various assumptions, which may include the fixed costs, variable costs, sales price per unit that are constant.