Incorrect CVP Assumption on Cost Classification

Steps:

• List standard CVP assumptions: fixed costs constant in total, variable costs linear per unit, constant selling price, and equal production/sales.
• Compare choice A: It claims easy cost division, but CVP requires clear separation, which isn't always true.
• Verify B, C, D align with core assumptions within relevant range.
• Select A as the non-correct assumption due to real-world mixed costs.

Why A is correct:

• CVP analysis assumes perfect separation of fixed and variable costs for linearity, but many costs are mixed (e.g., utilities with base fee plus usage), making division imprecise per accounting standards.

Why the others are wrong:

• B: Fixed costs are constant in total within the relevant range by definition.
• C: CVP assumes no inventory changes, so units produced equal units sold.
• D: Selling price per unit remains constant, ensuring predictable revenue.

Final answer: A