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Which one of the following is not an assumption of CVP analysis? Sales mix remains constant....

Which one of the following is not an assumption of CVP analysis?

Sales mix remains constant.

All costs are variable costs.

The behavior of costs and revenues are linear within the relevant range.

All units produced are sold.

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Answer #1

Correct Answer:

Option (2) All variable cost is the correct answer because the CVP analysis there are two types cost involved one is variable cost and other is fixed cost.Therefore, this not an assumption of CVP analysis.

Incorrect Answers:

Option( 1) Sales mix remains constant is an incorrect answer because sales mix ,products are sold at different prices at profit level in the organization. But the overall sales mix remain constant.

Option (3) The behavior of costs and revenues are linear within the relevant range is an incorrect answer because the price and profit level is different but the total sales remain same.

Option (4)All units produced are sold.is an incorrect answer because under the CVP analysis the all the variable cost is the correct answer.

So correct answer is an option (2)

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