The area in units where the fixed costs are fixed and the va

The area (in units) where the fixed costs are fixed and the variable costs are variable is called the

A. Constant Cost

B. Contribution Margin approach

C. Cost Volume Profit relationship

D. Relevant Range

E. Curvilinear Cost

Solution

ans) c

Cost Volume Profit relationship

The cost volume profit analysis, commonly referred to as CVP, is a planning process that management uses to predict the future volume of activity, costs incurred, sales made, and profits received.

CVP assumes the following:

fixed cost total constant ir respective of production ex:rent,depreciation e.t.c

veriable cost veriable according to the production ex: material,labour cost e.t.c.

Total costs = fixed costs + (unit variable cost × number of units)