Day: February 9, 2022

Which statements about cost–volume–profit analysis are correct?

1. Fixed costs remain constant over a range of activity.
2. Profits are calculated on an absorption costing basis.
3. Sales revenue increases in direct proportion to output.
4. There is only one product or constant sales mix.

Select ONE answer:

1. 1 and 2 only
2. 1, 2, 3 and 4
3. 1, 3 and 4 only
4. 2, 3 and 4 only

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct
4. Not correct

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