Cost Volume Profit Analysis Assignment Help

Posted on April 20, 2017

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Cost volume profit analysis is a critical point where the company reaches breakeven. If you are looking for the best cost volume profit analysis assignment help online we are here to help you. The purpose of cost volume profit analysis assignment help is to lift your knowledge.

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So let’s try to understand now what cost volume profit analysis means.
 

Cost volume profit analysis:

 

Cost volume profit analysis is a breakeven point where a company can understand the cost and volume of goods which helps the managers to make short term decisions. It also helps us to understand how changes in cost and volume of a product can affect an organization’s operating income and net income.
 

How does Cost volume profit analysis help in accounting?

 

Cost volume profit analysis which can be termed as CVP in accounting. It is a process which is used by the management to forecast the volume of activity, costs incurred, sales made and profit received. Cost volume profit analysis determines all costs as either fixed or variable. Cost volume profit analysis helps the company to determine their contribution margin
 

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Assumptions made in cost volume profit analysis:

 

Certain underlying assumptions place a limitation on the use of cost volume profit analysis. Some of the key assumptions are as follows
 

*Sales and variable costs will always be constant (per unit).
*Total fixed cost will be constant.
*Whatever is produced should be sold.
*When activity changes cost will be effective
*There is no significant change in the size of inventory.
 

Limitation of cost volume profit analysis:

 

Cost volume profit analysis is a short run marginal analysis. It predicts that the variable cost of the unit and unit revenues are constant, which is appropriate for small changes and the recent production of sales, and assumes a division between the fixed and variable cost, though in long term all costs are variable. So for long term analysis that considers the entire life span of a product one, therefore, can’t rely on cost volume profit analysis.
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