A Presentation Report on Cost–Volume–Profit Analysis (Cvp)

2166 WordsApr 22, 20139 Pages
A presentation report on Cost–volume–profit analysis (CVP) Prepared for: Ms. Wahida Akther Lecturer Department of Business Administration Course code: ACC- 324 Course title: Taxation Prepared by: Group name: Exclusive NAME | ID | Omar Faruk | 1001010169 | Mirza Atiqul Hoque | 1001010182 | Minhaj Sultana | 1001010184 | Mushfiqur Rahman | 1001010186 | khairul Anam Choudhury | 1001010199 | Section:(D) 8th semester 24th Batch Department of Business Administration, Leading University,Syhet. Date of Submission: August 07 ,2012 Introduction: The relationship between cost volume and profit is shown by cost-volume-profit analysis. It is an…show more content…
The assumptions underlying CVP analysis are: * The behavior of both costs and revenues is linear throughout the relevant range of activity * Costs can be classified accurately as either fixed or variable. * Changes in activity are the only factors that affect costs. * All units produced are sold. * When a company sells more than one type of product, the sales mix will remain constant. * Costs are only affected because activity changes. * If a company sells more than one product, they are sold in the same mix. The assumptions of the CVP model yield the following linear equations for total costs and total revenue (sales): Total costs = fixed costs + (unit variable cost × number of units) Total revenue = sales price × number of units) Figure: Diagram relating all quantities in CVP Understanding Fixed and Variable Costs: Before you can use CVP analysis to help you evaluate your business's operations, you need to get a handle on the fixed costs of your business, as compared to your variable costs. Virtually all of your business's costs will fall, more or less neatly, into one of two categories: * "Variable costs," which increase directly in proportion to the level of sales in dollars or units sold. Depending on your type of business, some examples would be cost of goods sold, sales commissions, shipping charges, delivery charges, and costs

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