Cost-volume-profit analysis

5 important questions on Cost-volume-profit analysis

Describe how the special case labelled CVP is different from the general case for predicting total revenues, total costs and operating profit.

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Distinguish between operating profit and net profit

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Describe the assumptions underlying CVP analysis

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'CVP is both simple and simplistic. If you want realistic analysis to underpin your decisions, look beyond CVP.' Do you agree? Explain.

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'There is no such thing as a fixed cost. All costs can be "unfixed" given sufficient time.' Do you agree? What is the implication of your answer for CVP analysis?

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