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. ...
View Full Document
- Spring '11
- Economics, CVP analysis, underlie CVP