Identify and briefly describe the assumptions of CVP.

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Answer 1

Textbook Question

Chapter 6, Problem 1Q

Identify and briefly describe the assumptions of CVP.

Expert Solution & Answer

To determine

Introduction:

Cost-volume profit analysis is a tool that helps in decision making by establishing a relationship between volume, price, variable cost, fixed cost and profit.

To identify and describe:

The assumptions of CVP.

Answer to Problem 1Q

The assumptions of CVP are:

Linear cost and revenue function
Cost can be categorized as either fixed or variable
Only volume affects total cost and total revenue.
Volume of production is equals to volume of sales
Product mix is constant

Explanation of Solution

The assumptions of CVP are:

Linear cost and revenue function:

A straight line is used to describe the relationship between total cost and sales volume and total revenue and sales volume.

Cost can be categorized as either fixed or variable:

To find mixed cost, we must determine total fixed cost and variable cost per unit.

Only volume affects total cost and total revenue:

Other factors such as employee learning curve, productivity gains etc. are ignored.

Volume of production is equals to volume of sales:

It is assumed that There will not be any change in beginning or ending inventory, it is assumed that all the units produced are sold during a period.

Product mix is constant:

The companies dealing in multiple products assumes that units sold, or sales revenue generated from each product or service line remains constant.

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Problem No. 2 The trial balance of Cleint Lumanao Nacho Supplies on February 10, 2025, before accepting Shila Tajonera as partner is shown as follows: Account Title Debit Credit Ato Cash reening smuo P 100,000 Accounts Receivable 250,000 Allowance for Uncollectible Accounts P 20,000 o Merchandise Inventory Equipment Accumulated Depreciation Accounts Payable Notes Payable 120,000 275,000 55,000 50,000 82,000 538,000 Lumanao, Capital Total P 745,000 P 745,000 Tajonera offered to invest cash to get a capital credit equal to one-half of Lumanao's capital after giving effect to the adjustments below. Lumanao accepted the offer. Valuation of some of the assets and liabilities of Lumanao, as agreed by the partners, are the following: • The merchandise is to be valued at P93,000. The accounts receivable is estimated to be 90% collectible. • The equipment is to be valued at P200,000. The partners also agreed that the name of the partnership will be Nacho Business. Required: 1. In the books of…

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Answer 2

Textbook Question

Chapter 6, Problem 1Q

Identify and briefly describe the assumptions of CVP.

Expert Solution & Answer

To determine

Introduction:

Cost-volume profit analysis is a tool that helps in decision making by establishing a relationship between volume, price, variable cost, fixed cost and profit.

To identify and describe:

The assumptions of CVP.

Answer to Problem 1Q

The assumptions of CVP are:

Linear cost and revenue function
Cost can be categorized as either fixed or variable
Only volume affects total cost and total revenue.
Volume of production is equals to volume of sales
Product mix is constant

Explanation of Solution

The assumptions of CVP are:

Linear cost and revenue function:

A straight line is used to describe the relationship between total cost and sales volume and total revenue and sales volume.

Cost can be categorized as either fixed or variable:

To find mixed cost, we must determine total fixed cost and variable cost per unit.

Only volume affects total cost and total revenue:

Other factors such as employee learning curve, productivity gains etc. are ignored.

Volume of production is equals to volume of sales:

It is assumed that There will not be any change in beginning or ending inventory, it is assumed that all the units produced are sold during a period.

Product mix is constant:

The companies dealing in multiple products assumes that units sold, or sales revenue generated from each product or service line remains constant.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Textbook Question

Chapter 6, Problem 1Q

Identify and briefly describe the assumptions of CVP.

Expert Solution & Answer

To determine

Introduction:

Cost-volume profit analysis is a tool that helps in decision making by establishing a relationship between volume, price, variable cost, fixed cost and profit.

To identify and describe:

The assumptions of CVP.

Answer to Problem 1Q

The assumptions of CVP are:

Linear cost and revenue function
Cost can be categorized as either fixed or variable
Only volume affects total cost and total revenue.
Volume of production is equals to volume of sales
Product mix is constant

Explanation of Solution

The assumptions of CVP are:

Linear cost and revenue function:

A straight line is used to describe the relationship between total cost and sales volume and total revenue and sales volume.

Cost can be categorized as either fixed or variable:

To find mixed cost, we must determine total fixed cost and variable cost per unit.

Only volume affects total cost and total revenue:

Other factors such as employee learning curve, productivity gains etc. are ignored.

Volume of production is equals to volume of sales:

It is assumed that There will not be any change in beginning or ending inventory, it is assumed that all the units produced are sold during a period.

Product mix is constant:

The companies dealing in multiple products assumes that units sold, or sales revenue generated from each product or service line remains constant.

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Answer 4

Textbook Question

Chapter 6, Problem 1Q

Identify and briefly describe the assumptions of CVP.

Expert Solution & Answer

To determine

Introduction:

Cost-volume profit analysis is a tool that helps in decision making by establishing a relationship between volume, price, variable cost, fixed cost and profit.

To identify and describe:

The assumptions of CVP.

Answer to Problem 1Q

The assumptions of CVP are:

Linear cost and revenue function
Cost can be categorized as either fixed or variable
Only volume affects total cost and total revenue.
Volume of production is equals to volume of sales
Product mix is constant

Explanation of Solution

The assumptions of CVP are:

Linear cost and revenue function:

A straight line is used to describe the relationship between total cost and sales volume and total revenue and sales volume.

Cost can be categorized as either fixed or variable:

To find mixed cost, we must determine total fixed cost and variable cost per unit.

Only volume affects total cost and total revenue:

Other factors such as employee learning curve, productivity gains etc. are ignored.

Volume of production is equals to volume of sales:

It is assumed that There will not be any change in beginning or ending inventory, it is assumed that all the units produced are sold during a period.

Product mix is constant:

The companies dealing in multiple products assumes that units sold, or sales revenue generated from each product or service line remains constant.

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Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

To determine

Introduction:

Cost-volume profit analysis is a tool that helps in decision making by establishing a relationship between volume, price, variable cost, fixed cost and profit.

To identify and describe:

The assumptions of CVP.

Answer to Problem 1Q

The assumptions of CVP are:

Linear cost and revenue function
Cost can be categorized as either fixed or variable
Only volume affects total cost and total revenue.
Volume of production is equals to volume of sales
Product mix is constant

Explanation of Solution

The assumptions of CVP are:

Linear cost and revenue function:

A straight line is used to describe the relationship between total cost and sales volume and total revenue and sales volume.

Cost can be categorized as either fixed or variable:

To find mixed cost, we must determine total fixed cost and variable cost per unit.

Only volume affects total cost and total revenue:

Other factors such as employee learning curve, productivity gains etc. are ignored.

Volume of production is equals to volume of sales:

It is assumed that There will not be any change in beginning or ending inventory, it is assumed that all the units produced are sold during a period.

Product mix is constant:

The companies dealing in multiple products assumes that units sold, or sales revenue generated from each product or service line remains constant.

Answer 8

Expert Solution & Answer

To determine

Introduction:

Cost-volume profit analysis is a tool that helps in decision making by establishing a relationship between volume, price, variable cost, fixed cost and profit.

To identify and describe:

The assumptions of CVP.

Answer to Problem 1Q

The assumptions of CVP are:

Linear cost and revenue function
Cost can be categorized as either fixed or variable
Only volume affects total cost and total revenue.
Volume of production is equals to volume of sales
Product mix is constant

Explanation of Solution

The assumptions of CVP are:

Linear cost and revenue function:

A straight line is used to describe the relationship between total cost and sales volume and total revenue and sales volume.

Cost can be categorized as either fixed or variable:

To find mixed cost, we must determine total fixed cost and variable cost per unit.

Only volume affects total cost and total revenue:

Other factors such as employee learning curve, productivity gains etc. are ignored.

Volume of production is equals to volume of sales:

It is assumed that There will not be any change in beginning or ending inventory, it is assumed that all the units produced are sold during a period.

Product mix is constant:

The companies dealing in multiple products assumes that units sold, or sales revenue generated from each product or service line remains constant.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

To determine

Introduction:

Cost-volume profit analysis is a tool that helps in decision making by establishing a relationship between volume, price, variable cost, fixed cost and profit.

To identify and describe:

The assumptions of CVP.

Answer 12

Answer to Problem 1Q

The assumptions of CVP are:

Linear cost and revenue function
Cost can be categorized as either fixed or variable
Only volume affects total cost and total revenue.
Volume of production is equals to volume of sales
Product mix is constant

Answer 13

Explanation of Solution

The assumptions of CVP are:

Linear cost and revenue function:

A straight line is used to describe the relationship between total cost and sales volume and total revenue and sales volume.

Cost can be categorized as either fixed or variable:

To find mixed cost, we must determine total fixed cost and variable cost per unit.

Only volume affects total cost and total revenue:

Other factors such as employee learning curve, productivity gains etc. are ignored.

Volume of production is equals to volume of sales:

It is assumed that There will not be any change in beginning or ending inventory, it is assumed that all the units produced are sold during a period.

Product mix is constant:

The companies dealing in multiple products assumes that units sold, or sales revenue generated from each product or service line remains constant.

Answer 14

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Identify and briefly describe the assumptions of CVP.

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Answer to Problem 1Q

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