Lucia is using cost-volume-profit analysis to predict profits for a new product line. Which of the following reflect how Lucia's

Question

14 days ago

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Lucia is using cost-volume-profit analysis to predict profits for a new product line. Which of the following reflect how Lucia's

analysis is subject to assumptions? (Check all that apply.)
A. Miscategorized variable costs cause more problems than miscategorized fixed costs.
B. The analysis lacks validity if the total fixed costs required for the calculated break-even point generates too high of capacity.
c. If costs are not accurately categorized as fixed or variable, the analysis may reflect too high of a break-even point.
d. If costs are not accurately categorized as fixed or variable, the analysis may reflect too low of a break-even point.

Business

1 answer:

Nady [2.9K] · Answer 1 · 2026-03-22T09:46:27+03:00

The validity of the analysis is compromised if the total fixed costs essential for reaching the calculated break-even point leads to an excessively high capacity. Answer: Option B. Explanation: Cost–volume–profit is a concept primarily utilized in managerial economics. It serves as a basic accounting model beneficial for introductory learning and for swift decision-making within a company or organization. This analysis assesses how variations in costs and volume influence a company's revenue and net profit. Several assumptions underlie this analysis, including constant sales price per unit, fixed variable costs per unit, and constant total fixed costs.