Question

enlighten on the elevance of CVP analysis for a tpical manager in a service industry

Answer 1

CVP analysis expands the use of information provided by breakeven analysis. A critical part of CVP analysis is the point where total revenues equal total costs. At this breakeven pount, a company will experience no income no loss. This BEP can be initial examination that precedes more detailed CVP analysis.

CVP analysis mainly deals with :

1. Deciding the selling price of services .

2. Deciding whether to bring new service in market or not.

3. Replacement of services.

By CVP analysis manager can decide whether to enhance the service being provided or to change them or make any cruicial decision which is required by company to lead the market in terms of there services.