The CVP analysis looks at the break even point with different volume and pricing options and works to determine the most effective. “The cost-volume-profit analysis, also commonly known as break-even analysis, looks to determine the break-even point for different sales volumes and cost structures, which can be useful for managers making short-term economic decisions” (Kenton, 2020). It is important to look at a break even point to be able to determine if the company is making any money or not. Not to mention the extent to how many resources go into one sales option, or another and which one works out the best for the company from a financial standpoint. The concept of a breakeven point is the threshold to where the company starts to make money, and why they are doing what they are doing in the first place, to make a living. If the breakeven point is more cost than profit then there is no point in doing whatever you are doing to be truthful. I think this is about one of the most important concepts in business as it relates to your income, and the income of your employees as well as the longevity of your business depends on getting it right.

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Cost volume profit analysis is the analysis of relationship between cost volume and profits It is on... View the full answer