Question

CVP analysis can be used to study the effect of: changes in selling prices on a...

CVP analysis can be used to study the effect of:

changes in selling prices on a company's profitability.

changes in variable costs per unit on a company's profitability.

changes in total fixed costs on a company's profitability.

All of the answers are correct.
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Answer #1
  • CVP analysis can be used to study the effect of:

changes in selling prices on a company's profitability.

WRONG ANSWER

changes in variable costs per unit on a company's profitability.

WRONG ANSWER

changes in total fixed costs on a company's profitability.

WRONG ANSWER

All of the answers are correct.

CORRECT OPTION
  • CVP analysis is used to study the effect of:

---Change in selling price per unit and variable cost per unit.
---Changes in total fixed cost

to determine company’s profitability.

  • CVP analysis uses income statement that shows, sales revenue, variable cost, contribution margin, fixed cost and net income.
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