Cost-Volume-Profit Analysis
Cost-volume-profit (CVP) analysis is used to determine how changes in costs and volume affect a company's operating income and net income. This concept reviews strength and weaknesses of the analysis and outlines its main principles.
Technique Overview
Cost-Volume-Profit Analysis Definition
Cost-Volume-Profit (CVP) Analysis, also known as Break-even Analysis, is a way of understanding the relationship between a business costs, the volume of good or sales they need to make and any potential profit. It is a tool for planning and decision-making that emphasises the interrelationships of cost, quantity sold, and price (Hansen et al., 2007). It allows managers to see the effect of changes in cost and volume on a company's profits so can be used help make decisions such as set selling prices, determine product-mix, and maximise the use of production facilities. (Weygandt et al., 2009).
Cost-Volume-Profit Analysis Description *
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Business Evidence
Strengths, weaknesses and examples of Cost-Volume-Profit Analysis *
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Business Application
Implementation, success factors and measures of Cost-Volume-Profit Analysis *
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Professional Tools
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Further Reading
Cost-Volume-Profit Analysis web and print resources *
Cost-Volume-Profit Analysis references (4 of up to 20) *
- Abdel-Kader, M., Luther, R. (2006) Management Accounting Practices in the British Food and Drinks Industry. British Food Journal, Vol. 108(5), pp. 336-357.
- Bettner, M. (2014) Using Accounting and Financial Information: Analyzing, Forecasting & Decision-Making. Business Expert Press
- Cafferky, M. E. and Wentworth, J. (2014) Breakeven Analysis: The Definitive Guide to Cost-Volume-Profit Analysis. 2nd edition. Business Expert Press
- Fitzgerald, D. (2011_ ConAgra Profit Falls 6.4% on Higher Costs, Flat Volume . WSJ.com, 24 March. Available from:
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