Ch. 21

Question 1

What is cost volume profit formula

Answer 1

(Sales price-variable cost) x quantity)- Fixed cost

Question 2

What are the two assumptions made in ch. 21

Answer 2

1. Fixed costs remain constant
2. Costs can be classified as either fixed or variable
3. Product mix remains constant
4. Total cost and revenues are linear
5. Volume is the only factor considered in the model