Question

Cost-volume-profit analysis requires management to classify all costs as either fixed or variable with respect to production or sales volume within the relevant range of operations. true or false

Answer 1

Answer: True

Explanation:

Cost-volume-profit analysis is refered to as the predictive tool that can be used for the determination of the profit consequences of the price changes, future cost changes, price and the volume of the activity changes.

It requires the management to classify all the costs as either fixed cost or variable cost with respect to production or sales volume within the relevant range of operations.