Identify the major simplifying assumption that underlies CVP analysis.

A$.$ The major simplifying assumption is that costs can be adjusted to be either fixed or variable in the different scenarios to determine profitability.

B$.$ The major simplifying assumption is that all costs are variable based upon the level of output, so a short$-$term horizon is predicable for the

analysis.

C$.$ The major simplifying assumption is that we can classify costs as either variable or fixed with respect to a single measure of the volume of

output activity.

D$.$ The major simplifying assumption is there is a single cost driver used and the others are disregarded as irrelevant for the analysis.