Which of the following is an assumption that is NOT made in most cost-volume-pro

Question

Which of the following is an assumption that is NOT made in most cost-volume-profit calculations?  

1) Selling price, variable expense per unit, and fixed expense per unit do not change throughout the relevant range.    
 2) There is no change in inventory levels.     
 3) In a multiproduct company, the sales mix does not change.   
 4) The selling price is constant

Answer is first one. I am guessing the variable expense per unit DOES change throughout the relevant range therefore it's not the case? (well I know selling price, and fixed expense stays constant) What's relevant range anyway? According to book, and by looking at the graph, it seems to me relevant range could mean "a range given for the certain point of activity" such as range between 200 unit and 600 unit. Well that's the way I see it.

 And within the relevant range, there is scattered graph, and we use quick-dirty method, or even high-low method to refine and to get accurate variable cost per unit. So it seems to me that, the analysist wants to pick relevant range randomly so that they can get the most accurate mixed cost (Y=a+bx)?  That's the way I see it.  Correct me if I am wrong!

Another quick additional qustion that I want you to answer. When they say CVP assumes "selling price stays sames, or fixed cost stays same, or sales mix doesn't change" , I am guessing they don't change during ONLY the specific period of the time?? For example, when you look at the Contribution income statment for the Month of September, I guess only during the September??? Or , for the entire (present/future) income statement as well?? But wouldn't there be unexpected circumstances where fixed cost have to change in the future?? you know what I mean?

Explanation / Answer

Which of the following is an assumption that is NOT made in most cost-volume-profit calculations? 1) Selling price, variable expense per unit, and fixed expense per unit do not change throughout the relevant range. 2) There is no change in inventory levels. 3) In a multiproduct company, the sales mix does not change. 4) The selling price is constant Answer is first one. I am guessing the variable expense per unit DOES NOT change throughout the relevant range therefore it's the case? (well I know selling price, is constant and fixed expense although remain same but per unit Fixed expense will change) What's relevant range anyway? Relevant range is the range to which the Fixed expense, variable expense and selling price will not change. Another quick additional qustion that I want you to answer. When they say CVP assumes "selling price stays sames, or fixed cost stays same, or sales mix doesn't change" , I am guessing they don't change during ONLY the specific period of the time and for specific number of units. For example, when you look at the Contribution income statment for the Month of September, I guess only during the September – yes because in this month units / selling price / variable cost and fixed cost is constant. I hope the above is clear to you now. Send me the message if you have any question on this.

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