Question: CVP is a powerful analytical tool that informs managers for business decision making. By the use of this tool, relationships between production or service costs,

CVP is a powerful analytical tool that informs managers for business decision making. By the use of this tool, relationships between production or service costs, volume, and profit can be modeled to determine sales volume needed at a certain price to break even or earn a target profit level or amount.

What are the key component of CVP Analysis? Discuss the basic assumptions of CVP analysis. Define the terms Unit Contribution Margin and Contribution Margin ratio.

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