Question

Compare and Contrast the Accountant's and Economist's model of cost-volume-profit analysis

1. Structure your answer to a maximum of 150 words.
2. Provide an application on the information that each of the models can provide.
3. Do not copy/paste or write verbatim from the book. Use your critical and analytical skills to present a substantial post that defines and illustrates the two models and their relevance.
4. Provide a Feedback to at least 1 other student taking into consideration the following
   • Comment on the quality of their post and explain why is this your assessment. (Was the post clear, did it cover the main points it had to?)
   • Complement their post with aspects that would be interesting to look at from the perspective the initial post is written from
   • Offer further research topics that will provide a further understanding

Specifications:

Online initial discussion responses are due on Day 5, peer responses are due on Day 6 of every week. You should have a minimum of two peer replies.

Word count for initial discussion response - 150 words maximum; per responses - 100 words maximum.

Answer 1

Cost-volume-profit analysis is a form of cost accounting which is a simplified model that is used for elementary instructions and for short term decisions.

There are 2 types of theories( different views) that is according to Accountant and other is according to Economist. The main difference lies in the cost factor!

Accountant model look at the actual cost that is only monetary costs. Whereas economist model look at the overal costs that includes actual cost as well as the additional costs.

Economist model consider opportunity costs too whereas accountant model doesn't consider opportunity cost. Due to which accountant model fail to provide accurate picture of business.