MA9902C00 Study Guide - Final Guide: Cost Accounting, Variable Cost, European Cooperation In Science And Technology
Document Summary
Cost-volume-profit analysis (cvp analysis), also commonly referred to as. Break-even analysis, is a way for companies to determine how changes in costs (both variable and fixed) and sales volume affect a company"s profit. With this information, companies can better understand overall performance by looking at how many units must be sold to break even or to reach a certain profit threshold or the margin of safety. Cost-volume-profit (cvp) analysis is a method of cost accounting that looks at the impact that varying levels of costs and volume have on operating profit. The cost-volume-profit analysis, also commonly known as breakeven analysis, looks to determine the breakeven point for different sales volumes and cost structures, which can be useful for managers making short-term business decisions. Cvp analysis makes several assumptions, including that the sales price, fixed and variable cost per unit are constant.
