Question

Why is it necessary for companies to use Cost Volume Profit Analysis?

Answer #1

**CVP analysis can help companies to find out the
contribution margin which is the amount after deducting variable
costs from the sales revenue. The remaining can be used to cover up
all the fixed costs and after that profits will
arrive.**

**Many companies uses CVP analysis to make informed
decisions about the products or services they sell,**

**CVP analysis helps companies to figure out the changes
in costs and volume after giving effect to net income and operating
expenses. It also gives companies a strong insight into the
profitability of products or services**

In
a cost volume profit analysis, what happens at the break even point
and why companies do not want to remain at the break even
point?

In a cost-volume-profit analysis, explain what happens at the
break-even point and why companies do not want to remain at the
break-even point..

What assumptions are inherent in cost-volume-profit analysis?
Since these assumptions are usually not wholly valid, why do
managers still use the analysis in decision making?

Cost-Volume-Profit Analysis: Analyze cost behavior in relation
to changes in volume. Define contribution margin and its use in
computing operating income. Discuss cost-volume-profit (CVP)
analysis and how it is used as a decision tool.

How would you describe the cost-volume-profit analysis and its
use in managerial planning?

Back to cost behavior and how we can use it to perform
Cost-Volume-Profit analysis. What are the primary underlying
assumptions in C-V-P?

What are several applications of cost-volume-profit
analysis?

Briefly explain the key assumptions underlie cost-volume-profit
analysis.

What is the underlying assumption for cost-volume-profit
analysis?
A.
Revenues and costs behave in a linear manner
B. Costs can be
categorized as variable, fixed, or semi-variable
C. Worker
efficiency and productivity remain constant
D. All of
these are assumptions that underlie cost-volume-profit analysis

Why do firms use CVP (Cost-Volume-Profit) relationships?
A)to estimate profit at different sales volumes
B)to classify costs as variable or fixed
C)to determine cost of sales
D)to determine the profit per unit sold

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 27 minutes ago

asked 33 minutes ago

asked 33 minutes ago

asked 38 minutes ago

asked 59 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 3 hours ago

asked 3 hours ago