Cost Volume-Profit relationship
Describe briefly the term Cost Volume-Profit relationship?
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Cost Volume-Profit (or CVP) relationship is and determine that studies the relationships between the following factors and its influence on the amount of profits. -Selling price per unit and sum total sales amount • Total cost that might be in any form that is, Variable cost or fixed cost.
-Volume of sales CVP is a management accounting instrument which expresses relationship between total sales, profit and total cost. Cost Volume-Profit relationship is one of the significant methods of cost and management accounting. It is a powerful instrument which finishing the entire picture of the profit composition and assists in planning of profits. It can as well answer what if kind of questions through telling the volume needed to create. This concept is related in all decision making regions, specifically in the short run.
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