CVP Analysis Statement Evaluation Steps:

• Identify core CVP assumptions: fixed/variable costs, linear relationships, constant sales price/mix.
• Evaluate statement 1 against CVP: it likely misstates break-even or margin of safety.
• Evaluate statement 2: it probably confuses contribution margin with total profit.
• Confirm statement 3: it correctly describes CVP's use in profit planning via formulas like P = (Sales - VC) - FC.

Why D is correct:

• Statement 3 aligns with CVP definition, focusing on how volume affects profit through contribution margin formula.

Why the others are wrong:

• A includes incorrect 1 with correct 3.
• B selects only wrong 1.
• C pairs wrong 2 with correct 3.

Final answer: D