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defining what is CVP? Why is CVP analysis useful? Why is it an important concept in...

defining what is CVP? Why is CVP analysis useful? Why is it an important concept in managerial accounting? Give examples

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COST-VOLUME-PROFIT ANALYSIS IS THE ANALYSIS OF THREE VARIABLES, VIZ COST, VOLUME AND PROFIT, WHICH EXPLORES THE RELATIONSHIP EXISTING AMONG COSTS, REVENUE, ACTIVITY LEVELS AND THE RESULTING PROFIT.

COST-VOLUME-PROFIT ANALYSIS AIMS AT MEASURING VARIATIONS OF PROFITS AND COSTS WITH VOLUME, WHICH IS SIGNIFICANT TO BUSINESS PROFIT PLANNING.

COST-VOLUME-PROFIT ANALYSIS MAKES USE OF THE MARGINAL COSTING PRINCIPLES FOR PLANNING AND FOR MAKING SHORT-RUN DECISIONS

THE RELATIONSHIP BETWEEN COST, VOLUME AND PROFIT MAKES UP THE PROFIT STRUCTURE OF A COMPANY. SO, THE COST-VOLUME-PROFIT ANALYSIS BECOMES ESSENTIAL FOR EFFECTIVE BUDGETING AND PROFIT PLANNING.

HELPS TO DETERMINE THE MINIMUM SALES VOLUME TO AVOID LOSSES, AND THE SALES VOLUME AT WHICH THE PROFIT TARGET OF THE COMPANY WILL BE ACHIEVED. IT HELPS MANAGEMENT TO FIND THE MOST PROFITABLE COMBINATION OF COSTS AND VOLUME.

USES COST-VOLUME-PROFIT ANALYSIS TO PROJECT AND EVALUATE THE IMPLICATIONS OF ITS SHORT TERM DECISIONS ABOUT FIXED COSTS, MARGINAL COSTS, SALES VOLUME AND SELLING PRICE FOR ITS PROFIT PLANS ON A CONTINUOUS BASIS.

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