ECONOMICS

Detailed explanation-1: -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-2: -The Profit Volume (P/V) Ratio is the measurement of the rate of change of profit due to change in volume of sales. It is one of the important ratios for computing profitability as it indicates contribution earned with respect of sales.

Detailed explanation-3: -Cost of sales and COGS are subtracted from total revenue, thus yielding gross profit. Companies that offer goods and services are likely to have both cost of goods sold and cost of sales appear on their income statements.

Detailed explanation-4: -Cost-Volume-Profit Analysis (CVP analysis), also commonly referred to as Break-Even Analysis, is a way for companies to determine how changes in costs (both variable and fixed) and sales volume affect a company’s profit.