1. What is meant by CVP analysis? 2. Provide three examples of management decisions that benefit...

1. What is meant by CVP analysis?

2. Provide three examples of management decisions that benefit from CVP analysis.

Solutions

Expert Solution

COST - VOLUME - PROFIT (CVP) ANALYSIS

1) It is a managerial tool showing the relationship between various ingredients of profit planning through cost, selling price and volume of activity. Cost Volume Profit (CVP) Analysis is the analysis of three variables cost, volume and profit. Such an analysis explores the relationship between cost, revenue, activity levels and the resulting profit. It aims at measuring variations in cost and volume. It provides the information about the behaviour of cost in relation to volume, sensitivity of profits due to variation in output, amount of profit for a projected sales volume, quantity of production and sales for a target profit level.

2) Management get benefits by using CVP analysis in Budgeting, Decision making and Profit planning . It elucidates the impact of the following on the net profit :

Changes in selling prices,
Changes in volume of sales,
Changes in variable cost,
Changes in fixed cost.

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Explain how CVP can be used to benefit management decisions. Use your own words to describe...

Explain how CVP can be used to benefit management decisions. Use your own words to describe a situation where CVP could be used to benefit a specific decision. What factors can be controlled in the calculation? What happens to CVP when you leave the relevant range of operations? Explain the difference between a traditional Income Statement and a contribution margin Income Statement. What information does each provide and when should each be used? Managerial Accounting.

Discuss the risk-benefit analysis, please provide examples of its application.

What are some of the most important financial management decisions? Provide some real-life examples.

What is meant by Complacency is the enemy of curiosity? Provide examples.

1. Name three different ways to explore stress management. Provide examples of each. 2. List at...

1. Name three different ways to explore stress management. Provide examples of each. 2. List at least 5 ways stress can affect your body as well as your emotions. 3. What 3 coping skills have you developed over time to help to manage stress? Give at least 2 references in APA format to support your EACH answer. Answers need to be at least 200 words with at least 2 substantial replies with at least 150 words. Give the question in...

How does CVP analysis contribute to increasing the quality of decisions? What is your interpretation of...

How does CVP analysis contribute to increasing the quality of decisions? What is your interpretation of operating leverage? Is it relevant? Can you estimate it from a traditional GAAP accounting income statement?

What are the biggest challenges for managers using cvp analysis to make product decisions? Why?

Collapse 1. Name three different ways to explore stress management. Provide examples of each. 2. List...

Collapse 1. Name three different ways to explore stress management. Provide examples of each. 2. List at least 5 ways stress can affect your body as well as your emotions. 3. What 3 coping skills have you developed over time to help to manage stress? Give at least 2 references in APA format to support your EACH answer. Answers need to be at least 200 words with at least 2 substantial replies with at least 150 words. Give the question...

What are the three types of IT management controls described in the chapter? Provide two examples...

What are the three types of IT management controls described in the chapter? Provide two examples of each type. Internal Auditing: Assurance & Advisory Services fourth edition

1. Provide an analysis of how managerial decisions affect the structure of the WACC. 2. Explain...

1. Provide an analysis of how managerial decisions affect the structure of the WACC. 2. Explain the idea of WACC and how it is used in capitals budgeting. 3. Conclude with an example of how you would use the idea of WACC in making a capital budgeting decision.

Subjects