8.3 The assumptions underlying the CVP analysis outlined in Chapter 8 are 1 Total costs can be divided into a fixed component and a component that is variable with respect to the level of output. 2 The behaviour of total revenues and total costs is linear (straight line) in relation to output units within the relevant range. 3 The unit selling price, unit variable costs and fixed costs are known. 4 The analysis either covers a single product or assumes that a given revenue mix of products will remain constant as the level of total units sold changes.
