Post 1 - constant which is appropriate for small deviations...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Question #1: Why is CVP analysis generally used as a short-run tool? Would CVP ever be appropriate as a long-run model? Hi Professor and class, Being a manager, a person constantly strives to relate these elements to achieve the maximum profit. Apart from profit projection, the concept of Cost-Volume-Profit (CVP) is relevant to virtually all decision-making areas, particularly in the short run. CVP is a short run , marginal analysis, it assumes that unit variable costs and unit revenues are
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: constant, which is appropriate for small deviations from current production and sales, and assumes a clean division between fixed costs and variable costs, though in the long run all costs are variable. CVP can be used in a long-run model because it takes a period look at a product. The period can be a year and the data can then be extrapolated over the life of the product to give an estimate of the performance. Jack...
View Full Document

This note was uploaded on 07/16/2011 for the course COST ACCOU 410 taught by Professor David during the Fall '10 term at Kaplan University.

Ask a homework question - tutors are online