How is Cost-Volume-Pricing analysis useful in making pricing and product mix decisions? Why is it important...

How is Cost-Volume-Pricing analysis useful in making pricing and product mix decisions? Why is it important that we have a good understanding of the way costs behave (fixed / variable / relevant range) in order for the tool to be effective? What makes it difficult to get this understanding in the real world and what tools can we use to help us get as close as possible. When is the contribution margin ratio approach to CVP analysis most useful? Why?

Expert Solution

ekkarill92 answered 2 years ago

Linear programming can be used in making product mix decisions. Explain why it is sometimes undesirable...

Linear programming can be used in making product mix decisions. Explain why it is sometimes undesirable to concentrate on maximising sales of products with the highest unit contribution margin

Cost Behavior and Cost-Volume-Profit (CVP) Analysis are very important and useful concepts and tools used by...

Cost Behavior and Cost-Volume-Profit (CVP) Analysis are very important and useful concepts and tools used by management and other decision-makers. CVP analysis and one's understanding of cost behavior is helpful for business planning and controlling purposes. Due to the temporary downturn in the economy, sales revenues have decreased by 50% to 60% for many restaurants and eateries, retails stores and service-oriented businesses (e.g., hair salons ) thus affecting profitability and the ability to continue business operations. In order to survive the...

Cost-volume-profit analysis can also be used in making personal financial decisions. For example, the purchase of...

Cost-volume-profit analysis can also be used in making personal financial decisions. For example, the purchase of a new car is one of your biggest personal expenditures. It is important that you carefully analyze your options. Suppose that you are considering the purchase of a hybrid vehicle. Let's assume the following facts: The hybrid will initially cost an additional $4,500 above the cost of a traditional vehicle. The hybrid will get 40 miles per gallon of gas, and the traditional car...

Explain why different costs and revenues may be relevant when making short-term product mix decisions compared...

Explain why different costs and revenues may be relevant when making short-term product mix decisions compared with making long-term product mix decisions?

What is conjoint analysis? . 2. Are the conjoint results useful in making any pricing decision?...

What is conjoint analysis? . 2. Are the conjoint results useful in making any pricing decision? What useful information can be gleaned from the rese

Provide examples of how cost–volume–profit analysis can be used for decision-making.

How is utilitarianism useful and problematic when making decisions that affect others and how should a...

How is utilitarianism useful and problematic when making decisions that affect others and how should a business determine what actions to take?

Product Management: Why do cost allocations cause inappropriate pricing decisions? What types of ratios are most...

Product Management: Why do cost allocations cause inappropriate pricing decisions? What types of ratios are most useful for Product Managers?

Decisions makers need information that is useful in making rational decisions, the decisions makers are different...

Decisions makers need information that is useful in making rational decisions, the decisions makers are different and need different information, so every groups of users need different information, but accounting cant adopts the idea of producing a series of special- purpose report, instead that FASB and IAS adopt uniform report which contain information has several characteristics such as understandability, benefits costs, relevance and reliability, explain?

Why is CVP analysis useful? Why is it an important concept in managerial accounting?

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