Cost–volume–profit (CVP), in managerial economics, is a form of cost accounting. It is a simplified model, useful for elementary instruction and for short-run decisions. A critical part of CVP analysis is the point where total revenues equal total costs (both fixed and variable costs). At this break-even point, a company will experience no income or loss. This break-even point can be an initial examination that precedes more detailed CVP analysis. CVP analysis employs the same basic assumptions as in breakeven analysis. The objective of CVP analysis is to forecast profits, to set budgets, to evaluate performance, to set pricing, to determine overheads and to achieve capacity. An efficient manager or business owner tries to bring out the best results from cost-volume-profit analysis, while steering clear of assumptions. The engaging presentation will give you more details on the topic.

Aparika Sharma

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