1. Which of the following is NOT an underlying assumption of cost-volume-profit analysis?

A. We can classify expenses into fixed and variable categories.

B. In multiproduct companies, sales mix will be constant.

C. Revenues and expenses are linear over the relevant range.

D. The inventory level changes significantly during the period.

2. Winston Company has variable costs of $5 per unit and a selling price of $10 per unit. Fixed costs are $100,000. Planned unit sales for 2015 are 25,000 units. Actual unit sales for 2014 were 22,000 units. What is the margin of safety in units for 2015?

A. 2,000 units

B. 3,000 Units

C. 5,000 Units

D. 7,000 Units