A number of limitations are commonly mentionedwith respect to CVP analysis:1. The analysis assumes a linear revenue functionand a linear cost function.2. The analysis assumes that what is produced issold.3. The analysis assumes that fixed and variablecosts can be accurately identified.4. For multiple-product analysis, the sales mix isassumed to be known and constant.5. The selling prices and costs are assumed o beknown with certainty.
there no difference between break even profit analysis and cost volume profit analysis
cvp is the analysis that deals with how profits and cost change with a change in volume
b
One advantage of cost volume profit analysis is so that businesses can plan for the future. A business might be wanting to expand, but if the profit margin is too low, they may have to wait to expand.
Cost-volume-profit analysis (CVP), or break-even analysis,
there no difference between break even profit analysis and cost volume profit analysis
cost volume profit is use anlyse how cost and profit change with change in volume of activity
cvp is the analysis that deals with how profits and cost change with a change in volume
Cost-volume-profit analysis (CVP), or break-even analysis, is used to compute the volume level at which total revenues are equal to total costs.
b
One advantage of cost volume profit analysis is so that businesses can plan for the future. A business might be wanting to expand, but if the profit margin is too low, they may have to wait to expand.
Cost-volume-profit analysis (CVP), or break-even analysis,
Cost volume profit analysis is a basic financial analysis tools to determine the underlying profitability of a company. Its components include activity level, price per unit, variable cost per unit and total fixed cost.
Cost volume profit analysis is useful in some applications. It is limited however, when it comes to operations which have more than one product. In addition, it can only produce approximate answers.Ê
CVP stands for Cost-Volume-Profit.
A key advantage to cost-volume-profit analysis is the fact that it allows managers to more easily answer questions and provides details of company activity. A large drawback is the fact that CVP is limited to its amount of information it can provide.
Due to several factors