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COST PROFIT VOLUME ANALYSIS
Cost profit volume (CVP) analysis is an essential tool for profit planning. It can be explained as - ' a managerial tool showing the relationship among various ingredients of profit planning, that is, cost (fixed and variable), volume and selling price of activity. It presents information regarding-
1. Quantity of production and sales for a target profit level
2. Behavior in relation to volume
3. Amount of profit for a projected sales volume
4. Sensitivity of profits due to variation in output
5. Volume of production or sales, where the business will break even.
Production of a particular product costs $50 per material, $80 per labour and variable overhead is 75% of labour cost. If the selling price per unit is $230 and fixed cost amounts
Purchase of office supplies.
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Lapsol limited manufacture electrical appliances for the export market. The management of the company are considering investing in one of two possible capital expenditure projects.
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