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MBA Project

# MBA Project

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INTRODUCTION

Cost volume profit (CVP) analysis generally defined as a planning tool by which manages can evaluate the effect of a change(s) in price, volume, variable cost or fixed cost on profit. Additionally, CVP analysis is the basis for understanding contribution margin pricing, related short-run decisions, target costing and transfer pricing. In the marginal costing varies directly with the volume of production or output. On the other hand, fixed cost remains unaltered regardless of the vo
INTRODUCTION

Cost volume profit (CVP) analysis generally defined as a planning tool by which manages can evaluate the effect of a change(s) in price, volume, variable cost or fixed cost on profit. Additionally, CVP analysis is the basis for understanding contribution margin pricing, related short-run decisions, target costing and transfer pricing. In the marginal costing varies directly with the volume of production or output. On the other hand, fixed cost remains unaltered regardless of the vo

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08/07/2013

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INTRODUCTION
Cost volume profit (CVP) analysis generally defined as a planning tool by whichmanages can evaluate the effect of a change(s) in price, volume, variable cost or fixedcost on profit. Additionally, CVP analysis is the basis for understanding contributionmargin pricing, related short-run decisions, target costing and transfer pricing. In themarginal costing varies directly with the volume of production or output. On the other hand, fixed cost remains unaltered regardless of the volume of output. In net effects, if volume is changed, variable cost varies as per the changes in volume. In this case, selling price remains fixed, fixed remains fixed and then there is a change in profit.Cost – Volume profit Analysis is a logical extension of Marginal costing. It is based on the same principles of classifying the operating expenses into fixed andvariable. Now-a-days it has become a powerful instrument in the hands of policy makersto maximum profits.There elements need to be related ion order to achieve the maximum profit. Apartfrom profit projection, the concept of cost volume profit is relevant the short run. Therelationship among cost, revenue and profit at different levels may be expressed in graphssuch as breakeven charts, profit volume graphs or in various statements forms.Earning of maximum profit is the ultimate goal of almost all businessundertakings. The most important factors influencing the earning of profit is the level of  production. (I.e. Volume of production).1

Profit depends on a large number of factors, most important of which are the costof manufacturing and the volume of sales, volume of sales depends upon the volume of  production and market forces which turns in related to costs.Management has no control over market. In order to achieve certain level of  profitability, it has to exercise control and management of costs, mainly variable cost.This is because fixed cost is a non-controllable cost.It helps to find out the profitability of a product, department of division to have better product mix, for profit planning and to maximize the profit of a concern.These decisions can include such crucial areas as pricing policies, product mixes,market expansion or contractions, outsourcing contracts, idle plant usage, discretionaryexpenses planning and a variety of other important considerations in the planning process. Given the broad range of context in which cost volume profit can be used.In other words, it helps in locating the level of output which evenly breaks thecost and revenues used in its broader sense, it means that system of analysis whichdetermine profit, cost and ales value at different levels of output. The cost Volume profitanalysis establishes the relationship of cost, volume and profit.Thus cost volume profit furnishes the complete picture of the profit structure. Inother word, cost volume profit is a management accounting tool that expressesrelationship among sales, volume, cost and profit. The cost volume analysis uses thetechniques of breakeven analysis, operating leverage, margin of safety and effect of changes on sales and contribution on margin and net operating income. The level of salesneeded to achieve desired target profit, in order to predict changes in net operatingincome. The data are cost sheet and balance sheet collected from the company.2

COMPANY PROFILE
HI TEK MACHINES Is one of the leading manufacturers, suppliers andexporters of manufactures of Machines Tools, gravity die casting, aluminum gravity diecasting, aluminum permanent mold casting, cylinder heads, Radial Drills, Rotary Lever,flywheel housings, actuator cylinders, gearbox housings, switch gear components for engineering and automobile. Started as a private company, it later on changed to a publiclimited gaining enormous recognition worldwide.The company was started in 2003. The company founder name is Mr. SrinivasaRao. The location is extremely convenient for our freight companies, suppliers, clientsand employees. And the site is suitable for future expansion.
Products:
Manufacturers, Suppliers and Exporters of aluminum die casting, gravity diecasting, Radial Drills, Rotary Lever , aluminum permanent mold casting, cylinder heads,flywheel housings, actuator cylinders, gearbox housings, switch gear components for engineering and automobile are :- -Aluminum Die Casting -Gravity Die Casting-Aluminum Permanent Mold Casting -Engine Components :- .Cylinder Heads .FlywheelHousings .Manifolds -Gear Components :- .Gearbox Housings .Adaptor Housings.Extension Arms -Engineering and Electrical Components .Actuator Housings .Actuator Cylinders .Switch Gear Components.3