Question

Cost-volume-profit analysis is used to predict how changes in _____ levels affect profit.multiple choicefixed and variableproduction and salescosts and salessales and production

Answer 1

High.

Cost-volume-profit (CVP) analysis is a way to find out how changes in variable and fixed costs affect a firm's profit. Companies can use CVP to see how many units they need to sell to break even (cover all costs) or reach a certain minimum profit margin.

The point of CVP analysis is to determine how changes in variable and fixed costs will affect profits. The three main elements are cost, sales volume, and price. A CVP analysis looks at how these elements influence profit.

All costs can be resolved into fixed and variable elements. (ii) Over the activity range being considered costs and revenues behave in a linear fashion. (iii) The only factor affecting costs and revenues is volume. (iv) The technology, production methods, and efficiency remain unchanged.

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