Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory

Financial Accounting

4. Merchandising Operations

Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following is an assumption of cost-volume-profit (CVP) analysis?

Selling price per unit changes with volume.

Variable cost per unit increases as production increases.

Inventory levels fluctuate significantly during the period.

All costs can be classified as either variable or fixed.

Previous problemNext problem

Verified step by step guidance

Understand the concept of Cost-Volume-Profit (CVP) analysis: CVP analysis is a method used to understand how changes in costs, sales volume, and price affect a company's profit. It relies on certain assumptions to simplify the analysis.

Review the assumptions of CVP analysis: One key assumption is that all costs can be classified as either variable or fixed. This means costs are categorized based on their behavior in relation to changes in production or sales volume.

Evaluate the incorrect options: Selling price per unit changes with volume is not an assumption of CVP analysis; CVP assumes selling price remains constant. Similarly, variable cost per unit increasing as production increases contradicts the CVP assumption that variable costs per unit remain constant. Inventory levels fluctuating significantly is also not part of CVP assumptions, as CVP assumes inventory levels remain stable.

Focus on the correct assumption: The correct assumption is that all costs can be classified as either variable or fixed. This simplifies the analysis by allowing the calculation of contribution margin and break-even point.

Apply this understanding to solve similar problems: When analyzing CVP-related questions, always verify whether the assumptions align with the principles of CVP analysis, such as constant selling price, constant variable cost per unit, and stable inventory levels.