Topic 3 CVP analysis 2016 - Managerial Accounting Cost-Volume-Profit Relationships Class 3 1 Content Definition Break-Even Point CVP analysis Methods

Topic 3 CVP analysis 2016 - Managerial Accounting...

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1 Managerial Accounting Cost-Volume-Profit Relationships Class 3
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Content Definition Break-Even Point CVP analysis- Methods Example Assumptions Underlying CVP Analysis References 2
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3 Definition Cost-Volume-profit (CVP) analysis is of the most powerful tools that managers have at their command. This analysis has following elements: Price of products Volume or level of activity Per unit variable costs Total fixed costs Mixed and Total costs Mix of products sold.
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4 Definition Cost-Volume-profit (CVP) analysis helps managers understand the interrelationship between cost, volume, and profit, it is a vital tool in many business decisions. These decisions include: What product to manufacture or sell; What pricing policy to follow; What marketing strategy to employ; What type of productive facilities to acquire; Business planning (special calculations for business plan).
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5 The Break-Even Point
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