wk4 dq1.docx - Cost-volume profit(CVP analysis is a method of cost accounting that looks at the impact that varying levels of costs and volume have on

# wk4 dq1.docx - Cost-volume profit(CVP analysis is a method...

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Cost-volume profit (CVP) analysis is a method of cost accounting that looks at the impact that varying levels of costs and volume have on operating profit. Cost-volume profit analysis looks to determine the break-even point for different sales volumes and cost structures, which can be useful for managers making short-term economic decisions [CITATION Nor \l 1033 ] . It analysis estimates how much changes in a company's costs, both fixed and variable , sales volume, and price, affect a company's profit. This is a very powerful tool in managerial finance and accounting [ CITATION Pea18 \l 1033 ] . It is one of the most widely used tools in managerial accounting to help managers make better decisions . X Cost/Revenue Sales Revenue (SR) Total Cost (TC) Profit BEP Variable Cost (VC) Loss Fixed Cost (FC) Y Output Units Figure. Cost-Volume profit (CVP) In the above given diagram, the cost/revenue and output signified by Y-axis and x-axis. Fixed cost represents by FC, likewise variable cost, sales revenue, total cost, breakeven point represents by VC, SR, TC, and BEP. The SR and TC is displayed where SR and TC intersect at a

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• Spring '18
• Cost-Volume Profit

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