Explain why examining cost behavior is important when using cost$-$volume$-$profit analysis.

A$.$ Cost behavior is important for understanding the inputs into the cost$-$volume$-$profit analysis because it allows employees to manage budgets for each division of the organization. Since variable costs are the only concern when it comes to budgets, the primary effect on budgets comes from the number of employees working, and$/$or the volume of costs during manufacturing.

B$.$ Cost behavior is important for understanding the inputs into the cost$-$volume$-$profit analysis because it allows managers to manage budgets for each division of an organization by changing assumptions $($such as salaries and fixed costs$)$ that can affect the profitability. Variable costs end up being the primary effect on the bottom line of an organization's profits, when reviewing the analysis.

C$.$ Cost behavior is important for understanding the inputs into the cost$-$volume$-$profit analysis because it allows vendors to assess different products to determine which provides the greater return on their purchases. Since overall costs are one of the primary factors for vendors to determine the quantity of a good, companies can calculate a profit analysis using this data.

D$.$ Cost behavior is important for understanding the inputs into the cost$-$volume$-$profit analysis because it allows managers to better assess how changes in assumptions $($such as sales volume and prices$)$ will affect the overall profitability of the organization. Since fixed costs are assumed to remain the same within a relevant range of activity, the primary effect on profits comes from changes in sales, changes in variable costs, and$/$or the volume of activity $($which creates changes in contribution margin$).$