Importance of CVPĬVP analysis is important because it assists in the following areas: Volume is the most crucial factor that affects cost. Thus, cost-volume-profit (CVP) analysis measures changes in cost in relation to changes in volume. In turn, this depends on the volume of production, which bears a relationship to the cost. Profit depends on sales, the sales price depends on the cost, and the volume of sales depends on the volume of production. ![]() These three factors of cost, volume, and profit share a connection and are interdependent. The most crucial include the manufacturing cost, the volume of sales, and the selling price of the product. Updated on SeptemCost-Volume-Profit (CVP) Analysis
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