Post 2 - Kinney, M.R. & Raiborn, C.A. (2011)....

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Hello Class and Professor: Why is CVP analysis generally used as a short-run tool? Would CVP ever be appropriate as a long-run model? CVP analysis is a short-run model that focuses on relationships among selling prices, variable cost, fixed cost, volume, and profit. This model is useful planning tool that can provide information about the impact on profit when changes are made in the cost structure or in the sales level. Such a perspective could produce better organizational decisions. As the period is extended, both the time value of money and life cycle costing become necessary considerations. References;
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Unformatted text preview: Kinney, M.R. & Raiborn, C.A. (2011). Cost Accounting: Foundations and Evolutions. Cengage Learning. Mason, Ohio Tammy Hardin Hi Tammy, Profit depends on a large number of factors, most important of which are the cost of manufacturing and the volume of sales, volume of sales depends upon the volume of production and market forces which turns in related to costs. Management has no control over market. In order to achieve certain level of profitability, it has to exercise control and management of costs, mainly variable cost. This is because fixed cost is a non-controllable cost. Good post! Jack...
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