Cost Volume Profit Analysis Homework Help
Cost volume profit analysis is a method of cost accounting that is usable in managerial economics. Cost-volume profit analysis is based upon calculating the breakeven point of cost and volume of goods.It can be handy for managers in taking short-term economic decisions.Cost volume profit analysis can also be useful for general educational purposes.
Cost volume profit analysis implements the same basic assumptions as in breakeven analysis.The assumptions underlying Cost Volume Profit Analysis are:
- The behavior of both costs and revenues are linear over the relevant range of activity.
- In the process of cost volume profit analysis, Costs can be classified accurately as either fixed or variable.
- Cost volume profit analysis implies the assumption that changes in activity are the only factors that affect costs.
- All the units that were produced are sold.
- When a business organization sells different products, the product mix (the ratio of every product to total sales) will remain constant.
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