8-4 - ANSWER KEY The usefulness of CVP analysis is its...

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Unformatted text preview: ANSWER KEY The usefulness of CVP analysis is its ability to clearly forecast income expected to result from the short-run interplay of cost, volume, price, and quantity. It is often useful in analyzing current problems regarding product mix, make or buy, sell or process further, and pricing. In the long run, however, all of these factors and their relationships and the assumptions that underlie CVP regarding these factors are likely to change. This emphasizes that CVP only holds true for the short run. Results must be recalculated periodically to maintain validity. ...
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