The cost of a product consists of two items: fixed cost and variable cost.
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.
After reading this lesson, the
reader should be able to:
the meaning of cost-volume-profit analysis.
cost-volume-profit analysis while taking decisions.
the break-even chart.
the advantages and limitations of break-even analysis.
Tags : Accounting For Managers - Management Accounting-Cost Volume Profit Analysis
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