Question

The importance of using CVP analysis for businesses from managerial accounting perspective. The assignment needs to present how the CVP analysis is used, for which purpose and how it’s important for businesses. Also, assignment should convey logical reasoning for the information presented, clarity in conveying the required points. *Apa style citation sources needed* 800 words

Answer 1

105-261 . WK-16 11 profits 2 Cost - Volume - Profit (CVP) Analysis: - CVP and lysis is an analytical tool for studying the relationship between volume, cost, prices, and It is an integral part of the planning process of the fire the profit CVP analysis is very much useful thala nang into the effects and ement as it provides an inter-relationship of factors, which influence the profits of the tim. The relationship between cost volume the profit structure of an enterprise. Hence, the cup relationship becomes essential for budgeting and profil planning. to determine the manimum sales

AL 2020 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 20 21 22 23 24 25 26 27 28 29 30 M T W T F S S MT W T F S S MTWTFSS WEDNESDAY - APRIL Appointments WK-16 . 106-260 11 12 1 2 volume to avoid losses, and the sales volume to at which the profit goal. of the firm will be achieved It helps man combination of costs and volume User CVP analytise to predict and dynamię management therefore short runde police time of its costo marginal costs, Sales volume plans on a continuous basis CVP assumptions : -hmn > All costs, can be separated into Ti fined and variable on - Total fixed cost does not change iven profit 4 ST over the given volume range.

16 MAY 20/ APRIL - THURSDAY 107-259. WK 16 Appointments Contact Variation Solomon change Tare the multi product situations, sales mix not change 'the products does Graphical representation & in of a break even point I margin and losses at different levels of activity :-) Break even analysis highlights the concept of contribution - Break even analysis indicates the level of sales at which costs & revenue are in equilibrium N1 22 23 24 25 26 27 28 29 30 31 TWTFS 5 M T W T F S S M T W T F S S

18 MAY 2020 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 APRIL - SATURDAY 109-257. WK-16 Appointments as a 10 - BEP can be computed in terms of unit or in terms of monitory, value of sales volume or percentage Revenue/ cost costs 1 of capacity. variable cost- 9 Fixed cos19 110-256 SUNDAY 10 11 | BEPI - Unit 12 Key, Calwlations when using cup analysis are the contribution margin and the contribution margin ratio The contribution margin represents 19 20 21 22 23 24 25 26 27 28 29 30 31 MT W T F S S M T W T F S S M T W T 55 profit Revenue

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 M T W T F S S M T W T F S S MTWTFS MONDAY - APRIL Appointments WK-17. 111-255 10 20 the amount of income or profit the made be forel deducting of sales dollars available to cover when calculated as a ratio, it's the percent of sales dollars available to cover fixed costs. Once fixed costs are covered the next dollar of sales results in the having income The contribution margin revenue minus, all variable costs. be calculated dollars or on sing la per unit basis If the three B's Inc. has sales. of $ 1.500,000 and total ranable Costs of $ 90ooo its contribution the during the company sold 500000 year, the per unit company is sales maren is Assuming 8 its another way, it is the amount

APRIL - TUESDAY 18 19 20 21 22 23 24 25 26 27 28 29 30 31 MTWTFSS M T W T F S S MTWTFSS Appointments 112-254 . WK-17 9 Cost sales price is $3 and the variable se's unit 1. $ 1.80 Tue Contibution margin bey unt is The .contributia margin ratio'is $ 10 11 40%. per unit- 12 $ 1.80 $ 1.20 Ergin ratio Sales 1500000 $ 3 variable cost 9 wooo Contribution 600 ooo Contribution ma. $ 600000 x 100 = 40% $ 1500 000 $_1020 x 100 40% $ 3 Adrantage :- A major of erp analysis is that it a detailed mapshot det har samly. activity. This includes product to the amount of produced provides