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________ is an underlying assumption of cost-volume-profit analysis. A : All units produced are either sold or in ending inventory B : The behavior of both costs and revenues is curvilinear throughout the entire range of the activity index C : All costs can be classified as either variable or fixed with reasonable accuracy D : Changes in activity and other factors affect costs

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Answer:

C : All costs can be classified as either variable or fixed with reasonable accuracy

Explanation:

Cost volume profit analysis (CVP) makes the following assumptions when it is used to determine how any change in costs can affect income:

  • costs can be classified as fixed or variable, and they are constant
  • revenues are linear with a given range
  • all units produced are sold
  • costs will only change if output changes

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