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Cost-volume-profit analysis is recognized as a form of cost accounting. It is considered as one of the simplified models that is used for elementary instructions. The support from our academic professionals will be so helpful in understanding the facts. Cost-volume-profit analysis homework help will integrate the fundamental concepts related to the same. This is surely going to improve your performance, and all the complications will be removed with ease.
Cost-volume-profit analysis (CVP):
This analysis is used to evaluate the facts how changes in cost and volume affect any company’s income whether it is net income or operating cost. In cost-volume-profit analysis, several assumptions are made to perform the same that include:
- Sales price will be constant (per unit)
- Variable costs will be constant (per unit)
- Total fixed costs will be constant
- Whatever produced should be sold
- Costs will be affected when activity changes
- If company sells two or more products, then it will be sold in same
CVP analysis requires in identifying the company’s costs as variable or fixed in different procedures that include manufacturing cost, selling cost and administrative cost.
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Contribution margin:
CVP analysis needs contribution margin as key calculation method. It represents amount of income or profit made by the company before deducting the fixed costs. In other words, it represents the amount of money that is invested in different activities.
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Contribution margin ratio:
The contribution margin ratio is defined as the ratio of contribution margin to the sales. It is needed to know the percentage of profit one makes in the entire process.
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