Archive about 'Costs Volume Profit (CVP) Analysis'

Explain what is a break-even chart.

Tweet The analysis of revenues and costs in relation to the volume of production is known as break-even analysis. This relationship can be best shown in a break-even chart where the point at which total revenue equals total costs is the break-even point. This break-even point is where a company is neither making a profit […]

Why is it important to understand Break-even point in Business Decisions

Tweet Break-even point is important for business decisions: As break-even point marks the very lowest level to which activity can drop without putting the life of the company in jeopardy. By understanding break-even analysis, a firm can decide on which following strategies to use in order to increase profit or decrease loss like: Increase sale […]

Explain how to use graphical technique to draw a Break-even graph or Cost volume profit graph. What are the assumptions used in constructing the typical break even graph

Tweet Part A: how to construct a typical break-even point graph: The Break-even point can be found by graphing the cost and revenue relationships. The following are the steps to do so: Step 1: Draw the axes. The horizontal axis the sales volume and the vertical axis is dollars of cost and revenue. Step 2: […]

List Of Topics Under The Heading Cost-Volume-Profit/CVP Analysis

Tweet Click to the respective topic on Cost-Volume-Profit/CVP Analysis Content Page On COST-VOLUME-PROFIT/CVP ANALYSIS 1.0 Cost Volume Profit/CVP for Short Term Decision Making 2.0 Limitation of Cost Volume Profit/CVP analysis  

Explain what are the limitations of Cost Volume Profit (CVP) Analysis For Short Term Decision Making

Tweet The following are the limitations of Cost Volume Profit Analysis: 1. Segregation of total costs into its fixed and variable components is difficult to do. 2. Fixed costs are unlikely to stay constant as output increases beyond a certain range of activity. 3. The analysis is restricted to the relevant range specified and beyond […]

Explain what is Cost Volume Profit (CVP) Analysis

Tweet Cost Volume Profit analysis is a short term decision making tool used to assist managers in understanding the behavior of total costs, total revenues and operating income as changes occur in the output level, selling prices, variable cost or fixed costs. Cost Volume Profit analysis is able to show the impact on the organization […]