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  • Strategic Cost Management

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    Estrada, Jemuel A.
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    Cost Volume Profit (CVP) analysis is a technique for profit planning that systematically analyzes the relationship between profits, costs, and sales volume. It examines how factors like selling price, variable costs per unit, fixed costs, and unit sales impact profits, with profits tending to increase with higher prices, lower variable costs, lower fixed costs, and higher sales volume. CVP analysis is used to calculate break-even points in both pesos and units sold to determine the sales level needed for a product or company to reach the point where total revenue equals total costs. It can also be applied to analyze profits for companies with multiple products.

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    Cost Volume Profit (CVP) analysis is a technique for profit planning that systematically analyzes the relationship between profits, costs, and sales volume. It examines how factors like selling price, variable costs per unit, fixed costs, and unit sales impact profits, with profits tending to increase with higher prices, lower variable costs, lower fixed costs, and higher sales volume. CVP analysis is used to calculate break-even points in both pesos and units sold to determine the sales level needed for a product or company to reach the point where total revenue equals total costs. It can also be applied to analyze profits for companies with multiple products.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    11 views7 pages

    Strategic Cost Management

    Uploaded by

    Estrada, Jemuel A.
    Cost Volume Profit (CVP) analysis is a technique for profit planning that systematically analyzes the relationship between profits, costs, and sales volume. It examines how factors like selling price, variable costs per unit, fixed costs, and unit sales impact profits, with profits tending to increase with higher prices, lower variable costs, lower fixed costs, and higher sales volume. CVP analysis is used to calculate break-even points in both pesos and units sold to determine the sales level needed for a product or company to reach the point where total revenue equals total costs. It can also be applied to analyze profits for companies with multiple products.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 7

    Cost Volume Profit Analysis

    CVP Analysis
    - Useful for profit planning by way of systematic analysis of the profits relationship with
    various costs and volume of sales
    Factors in affecting profit:

    Increase in Profits tend to be

    Selling price increase

    Unit variable cost(variable cost/unit) Decrease

    Fixed cost Decrease

    Volume(unit sales) Increase

    Single Product Break-even analysis


    - Compute breakeven point(total revenues = cost)

    ● Break-even point in pesos


    ● Break-even point in units
    Problem 1
    CVP Analysis Multiproduct

    Before answering Qs compute first the pesos

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