Cost-Volume-Profit Analysis [with Formula, Assumptions and Examples]! Cost-volume-profit (CVP) analysis is a technique that managers use for short-term profit planning. Fixed costs, which in total remain fixed within a relevant range and within a short period in which prices are not expected to change, do not change with change in the activity level and therefore may be considered as given [...]
Application of Cost Volume Profit Relationship in Decision Making! Now let us take a Few Decision Situations: i. Buying a Spares Versus Taking a Factory on Operating Lease: CVP analysis is carried using cost variability. Fixed cost remains fixed within a range. All short run decisions is linked to the principle of profit maximization given the cost structure comprising of [...]
In this article we will discuss about Cost-Volume-Profit Analysis:- 1. Meaning Cost-Volume-Profit Analysis 2. Objectives of Cost-Volume-Profit Analysis 3. Assumptions. Meaning Cost-Volume-Profit Analysis: Earning of maximum profit is the ultimate goal of almost all business undertakings. The most important factor influencing the earning of profit is the level of production (i.e., volume of output Cost-volume-profit analysis examines the relationship of [...]