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Introduction and Learning Objectives of Cost Volume Profit Analysis
Accounting For Managers - Management Accounting-Cost Volume Profit Analysis
Introduction and Learning Objectives of Cost Volume Profit Analysis
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The cost of a product consists of two items: fixed cost and variable cost.
Introduction
The cost of a product consists of two items: fixed cost and variable cost. Fixed costs are those which remain the same in total amount regardless of changes in volume. Variable costs are those which vary in total amount as the volume of production increases or decreases. As a result, at different levels of activity, the cost structure of a firm changes. The effect on profit on account of such variations is studied through break even analysis or cost-volume-profit analysis. This lesson deals with the various concepts, tools and techniques of cost-volume profit analysis.
Learning Objectives
After reading this lesson, the reader should be able to:
ՖՖ understand the meaning of cost-volume-profit analysis.
ՖՖ apply cost-volume-profit analysis while taking decisions.
ՖՖ construct the break-even chart.
ՖՖ evaluate the advantages and limitations of break-even analysis.
Tags : Accounting For Managers - Management Accounting-Cost Volume Profit Analysis
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