ECONOMICS

Detailed explanation-1: -What Is a Profit-Volume (PV) Chart? A profit-volume (PV) chart is a graphic that shows the earnings (or losses) of a company in relation to its volume of sales. Companies can use profit-volume (PV) charts to establish sales goals, analyze whether new products are likely to be profitable, or estimate breakeven points.

Detailed explanation-2: -Assuming your sales exceed your variable costs, each additional unit of sales volume increases your gross profits and your net income. If you can lower your costs without impacting revenue and maintain the same sales volume, your profits will go up.

Detailed explanation-3: -The cost-volume-profit graph depicts the relationships among cost, volume, and profits (operating income). are those fixed costs that can be traced to each segment and would be avoided if the segment did not exist. is use of fixed costs to extract higher percentage changes in profits as sales activity changes.

Detailed explanation-4: -The ratio shows the amount of contribution per rupee of sales. Since, in the short-term, fixed cost does not change, the profit-volume ratio also measures the rate of change of profit due to change in the volume of sales. ADVERTISEMENTS: It is influenced by sales and variable or marginal cost.

Detailed explanation-5: -The cost volume profit chart, often abbreviated CVP chart, is a graphical representation of the cost-volume-profit analysis. In other words, it’s a graph that shows the relationship between the cost of units produced and the volume of units produced using fixed costs, total costs, and total sales.