Question: True or false: CVP analysis investigates company personnel policies, business values, and performance measures for a specific company.

Answer: CVP is the acronym for cost, volume, profit and investigates how profit is affected by selling prices, costs and sales mix.

Question: According to the CVP analysis model and assuming all else remains the same, profits would be increased by a(n) ______.

Answer: decrease in the unit variable cost.

Question: Which of the following are assumptions of cost-volume-profit analysis? (select all that apply)

Answer: 1. In multi product companies, the sales mix is constant.

2. Costs are linear and can be accurately divided into variable and fixed elements.

Question: Simple CVP analysis can be relied on for changes in volume outside the relevant range.

Answer: False- The CVP model must be adjusted for activity levels outside the relevant range.

Question: The contribution margin income statement allows users to easily judge the impact of a change in ______ on profit. (select all that apply)

Answer: volume

selling price

cost