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About cost volume profit analysis:
Cost volume profit analysis is a term that is widely used in accounting. It is used to determine how cost and volume changes have the capacity to affect an operation’s operating income and net income. This determines the volume required to break even, the volume that needs to be acquired to reach targeted profit levels, discretionary expenditure effects, and the selling price to reach target volume levels.
It helps in the analysis of sensitivity of profits to changes in selling price, cost, volume and sales mix.
What are the assumptions made?
As per cost volume profit analysis homework answers, there are several assumptions made to obtain such an analysis. These are:
What are the components of cost volume profit analysis?
There are several components of CVP analysis. These include:
With the help of these variable, the equation for CVP analysis from cost volume profit analysis assignment answers in given by:
Px= vx+FC+ profit
Where p= price per unit
X= total number of units sold and produced
FC= fixed total cost
V= variable cost per unit.
Limitations of CVP analysis
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