Cost-volume-profit assumptions, Managerial Accounting

Assignment Help:

Cost-Volume-Profit assumptions

The main assumptions required in C-V-P analysis are:

1) The relationship holds merely within the appropriate range. The relevant range is a band of activity in which a specified cost behavior is stated.

2) The behavior of net cost and net revenue has consistently been determined and is lineal in the relevant range.

3) All costs can be splitted into fixed and variable such that mixed costs are decomposed into their fixed and their variable components.

4) Selling prices are constant hence we avoid quantity discounts.

5) Efficiency and production stay similar therefore we ignore the learning curve effect.

6) The prices of factors of production stay constant.

7) There are no limiting factors


Related Discussions:- Cost-volume-profit assumptions

Objective function, Objective Function Although the standard LP model c...

Objective Function Although the standard LP model can be either the maximization or the minimization type, it is sometimes useful to convert one form to the other. The maximiz

Feedback control system, Feedback Control System Feedback is informatio...

Feedback Control System Feedback is information about actual achievements or actual results produced within the organization (e.g. management control reports) with the purpose

Non-zero sum games, Non-Zero Sum Games Within very vast situations of p...

Non-Zero Sum Games Within very vast situations of possible non-zero games, varying degrees of co-operation exist between the participants. Games theory has been sufficiently de

Capital budgeting – planning investments, Project C would involve a current...

Project C would involve a current outlay of $50,000 on equipment and $15,000 on working capital. The investment in working capital would be increased to $21,000 at the end of the f

What does your analysis tell you about each firm, When the stock market is ...

When the stock market is going up over a long period of time, investors can become complacent about the risks of being a stockholder. After the significant decline of the stock mar

Illustrate what the traffic can bear pricing, What the traffic can bear pri...

What the traffic can bear pricing Pricing based on what the traffic can bear is not a sophisticated method. It is used by retail traders as well as by some manufacturing firms.

Trade credit, It is a spontaneous source of finance that is commonly extend...

It is a spontaneous source of finance that is commonly extended to business organization depending on the custom of the competition and trade prevailing within the organization and

Select appropriate alternative courses of action, Select Appropriate Altern...

Select Appropriate Alternative Courses of Action In practice, decision-making includes choosing among competing alternative courses of action and choosing the alternative which

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd