Which of the following is not an assumption made when performing cost-volume-profit analysis? a) Worker efficiency...
Which of the following is not an assumption made when performing cost-volume-profit analysis?
a) Worker efficiency is held constant.
b) Number of units produced is greater than the number of units sold.
c) The company produces within the relevant range of activity.
d) There is a linear relationship between cost and volume for both fixed and variable cost.
Homework Answers
Option (d) is correct
There is a linear relationship between cost and volume for variable costs only. Variable costs vary is same proportion as volume of production. Fixed costs have no relation between costs and volume of production. They remain fixed irrespective of volume of production.
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