ACCA PM · Chapter 5 · Question 7 of 10
Which of the following is an assumption underlying multi-product cost-volume-profit analysis?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) The sales mix remains constant at all levels of activity
Explanation
Multi-product CVP analysis uses a weighted average contribution, which is only valid if products are sold in a constant mix. It also assumes constant selling prices, constant variable costs per unit and fixed costs that do not change within the relevant range.
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