COST ACCOUNTING
COST VOLUME PROFIT ANALYSIS
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]


Selling price


Sales volume


Supplier discount


Total cost

Detailed explanation1: Costvolumeprofit (CVP) analysis is a way to find out how changes in variable and fixed costs affect a firm’s profit. Companies can use CVP to see how many units they need to sell to break even (cover all costs) or reach a certain minimum profit margin.
Detailed explanation2: The point of a CVP analysis is to determine how changes in variable and fixed costs will affect profits. What are the three elements of costvolumeprofit analysis? The three main elements are cost, sales volume and price. A CVP analysis looks at how these elements influence profit.
Detailed explanation3: Cost Volume Profit (CVP) analysis is used in cost accounting to determine how a company’s profits are affected by changes in sales volume, fixed costs, and variable costs.
Detailed explanation4: The main assumptions that accountants make when using cvp analysis are that fixed costs will not change within the relevant range of activity, all costs can be classified into fixed and variable, the selling price per unit will stay constant, and fixed costs remain constant.