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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.
Important Points Regarding to the Variance Analysis Variance reporting concentrates on both with favourable and unfavourable variances. Normally unfavourable variances are pun
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Visual Fit Method of Cost Estimation Cost estimation is based on past data regarding the dependent variable and the cost driver. The previous data on cost levels and the outpu
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