what do you see as the challenges of performing a CVP analysis for a managerial accountant?
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| What do you see as the challenges of performing a CVP analysis for a managerial accountant? | |
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| The CVP can provide only limited amount of information to a multi-product operation. It is very useful for a single product. But managers of multi-product businesses can have a difficult time with CVP analysis because each product will have many variable cost ratios. This makes the challenge of CVP analysis all the more difficult because it must be done for each specific product. | |
| CVP analysis provides only approximate answers to questions and not exact answers. It only answers hypothetical questions and the actual answers may be different if detailed solution of problems is put out. It leaves the business manager to decide how to act on the CVP analysis data he has at hand. | |
| So the manager has to take extreme caution when making decisions about business operations and finance. Decisions should be made after careful investigation and deliberation and not merely on statistics. | |
what do you see as the challenges of performing a CVP analysis for a managerial accountant?
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