{"id":46490,"date":"2024-04-15T22:13:06","date_gmt":"2024-04-15T22:13:06","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=46490"},"modified":"2024-04-15T22:13:06","modified_gmt":"2024-04-15T22:13:06","slug":"cost-volume-profit-analysis-is-not-based-on-which-of-the-following-recognition","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/cost-volume-profit-analysis-is-not-based-on-which-of-the-following-recognition\/","title":{"rendered":"Cost volume profit analysis is not based on which of the following recognition-"},"content":{"rendered":"<p>[amp_mcq option1=&#8221;The sales mix of the products remains constants&#8221; option2=&#8221;Quantity of stock is variable from year to year&#8221; option3=&#8221;Income and cost are linear within the prescribed limits&#8221; option4=&#8221;Value of goods and wages are immutable\/constant&#8221; correct=&#8221;option4&#8243;]<!--more--><\/p>\n<p>The correct answer is: D. Value of goods and wages are immutable\/constant.<\/p>\n<p>Cost-volume-profit (CVP) analysis is a tool that helps businesses understand the relationship between their costs, volume of sales, and profits. It is based on the following assumptions:<\/p>\n<ul>\n<li>The sales mix of the products remains constant. This means that the percentage of each product that is sold remains the same.<\/li>\n<li>Quantity of stock is variable from year to year. This means that the amount of inventory that a business holds can change from year to year.<\/li>\n<li>Income and cost are linear within the prescribed limits. This means that the relationship between income and costs is a straight line within a certain range of activity.<\/li>\n<li>Value of goods and wages are immutable\/constant. This means that the prices of goods and wages do not change.<\/li>\n<\/ul>\n<p>The assumption that the value of goods and wages are immutable\/constant is not always realistic. The prices of goods and wages can change due to a number of factors, such as inflation, changes in demand, and changes in supply. When the prices of goods and wages change, it can affect a business&#8217;s costs and profits.<\/p>\n<p>For example, if the price of goods increases, a business&#8217;s costs will increase. This will lead to a decrease in profits, unless the business is able to pass on the increase in costs to its customers in the form of higher prices.<\/p>\n<p>Similarly, if the price of wages increases, a business&#8217;s costs will increase. This will also lead to a decrease in profits, unless the business is able to increase productivity or reduce other costs.<\/p>\n<p>Therefore, the assumption that the value of goods and wages are immutable\/constant is not always realistic. When the prices of goods and wages change, it can affect a business&#8217;s costs and profits.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[amp_mcq option1=&#8221;The sales mix of the products remains constants&#8221; option2=&#8221;Quantity of stock is variable from year to year&#8221; option3=&#8221;Income and cost are linear within the prescribed limits&#8221; option4=&#8221;Value of goods and wages are immutable\/constant&#8221; correct=&#8221;option4&#8243;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[85],"tags":[],"class_list":["post-46490","post","type-post","status-publish","format-standard","hentry","category-accounting","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Cost volume profit analysis is not based on which of the following recognition-<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/cost-volume-profit-analysis-is-not-based-on-which-of-the-following-recognition\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Cost volume profit analysis is not based on which of the following recognition-\" \/>\n<meta property=\"og:description\" content=\"[amp_mcq option1=&#8221;The sales mix of the products remains constants&#8221; option2=&#8221;Quantity of stock is variable from year to year&#8221; option3=&#8221;Income and cost are linear within the prescribed limits&#8221; option4=&#8221;Value of goods and wages are immutable\/constant&#8221; correct=&#8221;option4&#8243;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/exam.pscnotes.com\/mcq\/cost-volume-profit-analysis-is-not-based-on-which-of-the-following-recognition\/\" \/>\n<meta property=\"og:site_name\" content=\"MCQ and Quiz for Exams\" \/>\n<meta property=\"article:published_time\" content=\"2024-04-15T22:13:06+00:00\" \/>\n<meta name=\"author\" content=\"rawan239\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"rawan239\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Cost volume profit analysis is not based on which of the following recognition-","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/exam.pscnotes.com\/mcq\/cost-volume-profit-analysis-is-not-based-on-which-of-the-following-recognition\/","og_locale":"en_US","og_type":"article","og_title":"Cost volume profit analysis is not based on which of the following recognition-","og_description":"[amp_mcq option1=&#8221;The sales mix of the products remains constants&#8221; 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