List five assumptions underlying the cost-volume-profit (CVP) analysis.

CPA-Advanced-Management-Accounting-Section-5

 Assumptions
(i) All costs can be resolved into fixed and variable elements.
(ii) Over the activity range being considered costs and revenues behave in a linear fashion.
(iii) The only factor affecting costs and revenues is volume.
(iv) The technology, production methods and efficiency remain unchanged.
(v) There is assumed to be no uncertainty.
(vi) There are no stock level changes or that stocks are valued at marginal cost only.

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