Question: Based on the text reading and other materials used, explain when a manager would use cost-volume-profit analysis and sensitivity analysis. In addition to the discussion,

Based on the text reading and other materials used, explain when a manager would use cost-volume-profit analysis and sensitivity analysis. In addition to the discussion, suppose a company decided to automate a production line. Determine what effects this would have on a company's cost structure using CVP terminology. Could these changes have any possible negative effect on the firm?

One of the focuses of CVP analysis is breakeven analysis. Specifically, CVP analysis helps managers of firms analyze what it will take in sales for their firm to break even.

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Managers would use CostVolumeProfit CVP analysis primarily when examining the relationship between costs volume and profits in order to make business decisions involving changes in production or sales ... View full answer

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