In order to perform cost-volume-profit analysis, a company must be able to identify its variable and fixed costs.

a. true
b. false

In order to perform cost-volume-profit analysis, a company must be able to identify its variable and fixed cost.

The correct answer is A

Explanation:

One of the assumptions of C-V-P analysis is that cost is accurately divided into fixed and variable. To perform cost-volume-profit analysis, a company needs to ascertain the fixed cost. Variable cost is also required in order to determine the contribution margin and contribution margin ratio. Break-even point in units is the ratio of fixed cost to contribution margin while break-even point in dollars is the ratio of fixed cost to contribution margin ratio.

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