Question: The cost - volume - profit analysis ( CVP ) is based on the assumption that there are linear relationships among all cost and revenue

The cost

-

volume

-

profit analysis

(

CVP

)

is based on the assumption that there are linear relationships among all cost and revenue variables. This linearity suggests practical and conceptual limitations on the usefulness of the CVP analysis. Alternatively, cost accountants, in some companies, use the nonlinear CVP analysis that includes techniques to estimate the nonlinear revenue and cost curves. Search the Internet for information about the nonlinear model for the CVP analysis.

Please respond to the following:

Discuss and compare the linear and nonlinear CVP analysis and provide your opinion about the effectiveness of both analyses.

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CostVolumeProfit CVP analysis is a management accounting technique used to understand the relationship between costs sales volume and profit Tradition... View full answer

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