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

Cost-Volume-Profit Analysis Definition

Cost-Volume-Profit (CVP) Analysis is a tool for planning and decision-making that emphasises the interrelationships of cost, quantity sold, and price (Hansen et al., 2007). It studies the effects of changes in cost and volume on a company's profits (Weygandt et al., 2009). It can be used for analysing management decisions such as setting selling prices, determining product-mix, and maximising the use of production facilities.

Cost-Volume-Profit Analysis Description *

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Business Evidence

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Examples of Cost-Volume-Profit Analysis *

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Business Application

Cost-Volume-Profit Analysis Implementation *

Success Factors of Cost-Volume-Profit Analysis *

Measures of Cost-Volume-Profit Analysis *

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Professional Tools

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Further Reading

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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.
  • Fitzgerald, D. (2011_ ConAgra Profit Falls 6.4% on Higher Costs, Flat Volume . WSJ.com, 24 March. Available from: [Accessed on 13 December 2011].
  • Hansen, D.R., Mowen, M.M., Guan, L. (2007) Cost Management: Accounting and Control. Cengage Learning.
  • Hirschey, M. (2008) Managerial Economics. Cengage Learning.

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