Cost-Volume-Profit Analysis

01 teChniCal cost-volumeprofit releVant to aCCa qualifiCation PaPer f5 In any business, or, indeed, in life in general, hindsight is a beautiful thing. If only we could panorama into a quartz glass ball and find out simply how many customers were going to buy our product, we would be able to falsify perfect business decisions and maximise profits. Take a restaurant, for example. If the owners knew simply how many customers would come in each razeing and the weigh and type of meals that they would order, they could ensure that staffing levels were exactly accurate and no decompose occurred in the kitchen. The reality is, of course, that decisions such(prenominal) as staffing and food purchases bemuse to be make on the basis of estimates, with these estimates being base on past experience. While management accounting data cant really help much with the crystal ball, it can be of use in providing the answers to questions about the consequences of varied courses of action. One of the most important decisions that needs to be made before any business even starts is how much do we need to sell in order to break?even? By break?even we mean simply back all our costs without making a profit.

CVP analysis looks in general at the effeCts of differing leVels of aCtiVity on the finanCial results of a business. the reason for the PartiCular foCus on sales chroma is beCause, in the short-run, sales PriCe, and the Cost of materials and labour, are usually cognize with a degree of aCCuraCy. This type of analysis is known as cost?volume?profit analysis (CVP analysis) and the purpose of this obligate is to cover some of the straight forward calculations and graphs required for this fortune of the Paper F5 syllabus, while also considering the assumptions which underlie any such analysis. the obJeCtiVe of CVP analysis CVP analysis looks primarily at the make of differing levels of activity on the financial results of a business. The reason for the special(a) focus on sales volume is... If you want to stick around a full essay, order it on our website: Ordercustompaper.com

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